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Page 1

SOME OLD FRIENDS

Since these Reminiscences are really what they profess
to be, random and informal, I hope I may be pardoned
for setting down so many small things.

In looking back over my life, the impressions which
come most vividly to my mind are mental pictures of
my old associates. In speaking of these friends
in this chapter, I would not have it thought that many
others, of whom I have not spoken, were less important
to me, and I shall hope to refer to this subject of
my early friends in a later chapter.

It is not always possible to remember just how one
first met an old friend or what one’s impressions
were, but I shall never forget my first meeting with
Mr. John D. Archbold, who is now a vice-president
of the Standard Oil Company.

At that time, say thirty-five or forty years ago,
I was travelling about the country visiting the point
where something was happening, talking with the producers,
the refiners, the agents, and actually getting acquainted.

One day there was a gathering of the men somewhere
near the oil regions, and when I came to the hotel,
which was full of oil men, I saw this name writ large
on the register:

John D. Archbold,
$4.00 a bbl.

He was a young and enthusiastic fellow, so full of
his subject that he added his slogan, “$4.00
a bbl.,” after his signature on the register,
that no one might misunderstand his convictions.
The battle cry of $4.00 a barrel was all the more
striking because crude oil was selling then for much
less, and this campaign for a higher price certainly
did attract attention—­it was much top good
to be true. But if Mr. Archbold had to admit
in the end that crude oil is not worth “$4,00
a bbl.,” his enthusiasm, his energy, and his
splendid power over men have lasted.

He has always had a well-developed sense of humour,
and on one serious occasion, when he was on the witness
stand, he was asked by the opposing lawyer:

“Mr. Archbold, are you a director of this company?”

“I am.”

“What is your occupation in this company?”

He promptly answered, “To clamour for dividends,”
which led the learned counsel to start afresh on another
line.

I can never cease to wonder at his capacity for hard
work. I do not often see him now, for he has
great affairs on his hands, while I live like a farmer
away from active happenings in business, playing golf,
planting trees; and yet I am so busy that no day is
long enough.

Speaking of Mr. Archbold leads me to say again that
I have received much more credit than I deserve in
connection with the Standard Oil Company. It
was my good fortune to help to bring together the
efficient men who are the controlling forces of the
organization and to work hand in hand with them for
many years, but it is they who have done the hard
tasks.

Page 2

The great majority of my associations were made so
many years ago, that I have reached the age when hardly
a month goes by (sometimes I think hardly a week)
that I am not called upon to send some message of
consolation to a family with whom we have been connected,
and who have met with some fresh bereavement.
Only recently I counted up the names of the early
associates who have passed away. Before I had
finished, I found the list numbered some sixty or
more. They were faithful and earnest friends;
we had worked together through many difficulties, and
had gone through many severe trials together.
We had discussed and argued and hammered away at questions
until we came to agree, and it has always been a happiness
to me to feel that we had been frank and aboveboard
with each other. Without this, business associates
cannot get the best out of their work.

It is not always the easiest of tasks to induce strong,
forceful men to agree. It has always been our
policy to hear patiently and discuss frankly until
the last shred of evidence is on the table, before
trying to reach a conclusion and to decide finally
upon a course of action. In working with so many
partners, the conservative ones are apt to be in the
majority, and this is no doubt a desirable thing when
the mere momentum of a large concern is certain to
carry it forward. The men who have been very
successful are correspondingly conservative, since
they have much to lose in case of disaster. But
fortunately there are also the aggressive and more
daring ones, and they are usually the youngest in
the company, perhaps few in number, but impetuous
and convincing. They want to accomplish things
and to move quickly, and they don’t mind any
amount of work or responsibility. I remember
in particular an experience when the conservative
influence met the progressive—­shall I say?—­or
the daring side. At all events, this was the
side I represented in this case.

ARGUMENTS VERSUS CAPITAL

One of my partners, who had successfully built up
a large and prosperous business, was resisting with
all his force a plan that some of us favoured, to
make some large improvements. The cost of extending
the operations of this enterprise was estimated at
quite a sum—­three million dollars, I think
it was. We had talked it over and over again,
and with several other associates discussed all the
pros and cons; and we had used every argument we could
command to show why the plan would not only be profitable,
but was indeed necessary to maintain the lead we had.
Our old partner was obdurate, he had made up his mind
not to yield, and I can see him standing up in his
vigorous protest, with his hands in his pockets, his
head thrown back, as he shouted “No.”

It’s a pity to get a man into a place in an
argument where he is defending a position instead
of considering the evidence. His calm judgment
is apt to leave him, and his mind is for the time being
closed, and only obstinacy remains. Now these
improvements had to be made—­as I said before,
it was essential. Yet we could not quarrel with
our old partner, but a minority of us had made up our
minds that we must try to get him to yield, and we
resolved to try another line of argument, and said
to him:

Page 3

“You say that we do not need to spend this money?”

“No,” he replied, “it will probably
prove to be many years before such a sum must be spent.
There is no present need for these facilities you
want to create, and the works are doing well as they
are—­let’s let well enough alone.”

Now our partner was a very wise and experienced man,
older and more familiar with the subject than some
of us, and all this we admitted to him; but we had
made up our minds, as I have said, to carry out this
idea if we could possibly get his approval, and we
were willing to wait until then. As soon as the
argument had calmed down, and when the heat of our
discussion had passed, the subject was brought up again.
I had thought of a new way to approach it. I
said:

“I’ll take it, and supply this capital
myself. If the expenditure turns out to be profitable
the company can repay me; and, if it goes wrong, I’ll
stand the loss.”

That was the argument that touched him. All his
reserve disappeared and the matter was settled when
he said:

“If that’s the way you feel about it,
we’ll go it together. I guess I can take
the risk if you can.”

It is always, I presume, a question in every business
just how fast it is wise to go, and we went pretty
rapidly in those days, building and expanding in all
directions. We were being confronted with fresh
emergencies constantly. A new oil field would
be discovered, tanks for storage had to be built almost
over night, and this was going on when old fields
were being exhausted, so we were therefore often under
the double strain of losing the facilities in one
place where we were fully equipped, and having to
build up a plant for storing and transporting in a
new field where we were totally unprepared. These
are some of the things which make the whole oil trade
a perilous one, but we had with us a group of courageous
men who recognized the great principle that a business
cannot be a great success that does not fully and
efficiently accept and take advantage of its opportunities.

How often we discussed those trying questions!
Some of us wanted to jump at once into big expenditures,
and others to keep to more moderate ones. It
was usually a compromise, but one at a time we took
these matters up and settled them, never going as fast
as the most progressive ones wished, nor quite so
carefully as the conservatives desired, but always
made the vote unanimous in the end.

THE JOY OF ACHIEVEMENT

The part played by one of my earliest partners, Mr.
H.M. Flagler, was always an inspiration to me.
He invariably wanted to go ahead and accomplish great
projects of all kinds, he was always on the active
side of every question, and to his wonderful energy
is due much of the rapid progress of the company in
the early days.

Page 4

It was to be expected of such a man that he should
fulfil his destiny by working out some great problems
at a time when most men want to retire to a comfortable
life of ease. This would not appeal to my old
friend. He undertook, single handed, the task
of building up the East Coast of Florida. He
was not satisfied to plan a railroad from St. Augustine
to Key West—­a distance of more than six
hundred miles, which would have been regarded as an
undertaking large enough for almost any one man—­but
in addition he has built a chain of superb hotels
to induce tourists to go to this newly developed country.
Further than this, he has had them conducted with great
skill and success.

This one man, by his own energy and capital, has opened
up a vast stretch of country, so that the old inhabitants
and the new settlers may have a market for their products.
He has given work to thousands of these people; and,
to crown all, he has undertaken and nearly completed
a remarkable engineering feat in carrying his road
on the Florida Keys into the Atlantic Ocean to Key
West, the point set out for years ago.

Practically all this has been done after what most
men would have considered a full business life, and
a man of any other nationality situated as he was
would have retired to enjoy the fruits of his labour.

I first knew Mr. Flagler as a young man who consigned
produce to Clark & Rockefeller. He was a bright
and active young fellow full of vim and push.
About the time we went into the oil business Mr. Flagler
established himself as a commission merchant in the
same building with Mr. Clark, who took over and succeeded
the firm of Clark & Rockefeller. A little later
he bought out Mr. Clark and combined his trade with
his own.

Naturally, I came to see more of him. The business
relations which began with the handling of produce
he consigned to our old firm grew into a business
friendship, because people who lived in a comparatively
small place, as Cleveland was then, were thrown together
much more often than in such a place as New York.
When the oil business was developing and we needed
more help, I at once thought of Mr. Flagler as a possible
partner, and made him an offer to come with us and
give up his commission business. This offer he
accepted, and so began that life-long friendship which
has never had a moment’s interruption. It
was a friendship founded on business, which Mr. Flagler
used to say was a good deal better than a business
founded on friendship, and my experience leads me
to agree with him.

For years and years this early partner and I worked
shoulder to shoulder; our desks were in the same room.
We both lived on Euclid Avenue, a few rods apart.
We met and walked to the office together, walked home
to luncheon, back again after luncheon, and home again
at night. On these walks, when we were away from
the office interruptions, we did our thinking, talking,
and planning together. Mr. Flagler drew practically

Page 5

all our contracts. He has always had the faculty
of being able to clearly express the intent and purpose
of a contract so well and accurately that there could
be no misunderstanding, and his contracts were fair
to both sides. I can remember his saying often
that when you go into an arrangement you must measure
up the rights and proprieties of both sides with the
same yardstick, and this was the way Henry M. Flagler
did.

One contract Mr. Flagler was called upon to accept
which to my surprise he at once passed with his O.K.
and without a question. We had concluded to purchase
the land on which one of our refineries was built
and which was held on a lease from John Irwin, whom
we both knew well. Mr. Irwin drew the contract
for the purchase of this land on the back of a large
manila envelope that he picked up in the office.
The description of the property ran as such contracts
usually do until it came to the phrase “the
line runs south to a mullen stalk,” etc.
This seemed to me a trifle indefinite, but Mr. Flagler
said:

“It’s all right, John. I’ll
accept that contract, and when the deed comes in,
you will see that the mullen stalk will be replaced
by a proper stake and the whole document will be accurate
and shipshape.” Of course it turned out
exactly as he said it would. I am almost tempted
to say that some lawyers might sit at his feet and
learn things about drawing contracts good for them
to know, but perhaps our legal friends might think
I was partial, so I won’t press the point.

Another thing about Mr. Flagler for which I think
he deserves great credit was that in the early days
he insisted that, when a refinery was to be put up,
it should be different from the flimsy shacks which
it was then the custom to build. Everyone was
so afraid that the oil would disappear and that the
money expended in buildings would be a loss that the
meanest and cheapest buildings were erected for use
as refineries. This was the sort of thing Mr.
Flagler objected to. While he had to admit that
it was possible the oil supply might fail and that
the risks of the trade were great, he always believed
that if we went into the oil business at all, we should
do the work as well as we knew how; that we should
have the very best facilities; that everything should
be solid and substantial; and that nothing should be
left undone to produce the finest results. And
he followed his convictions of building as though
the trade was going to last, and his courage in acting
up to his beliefs laid strong foundations for later
years.

There are a number of people still alive who will
recall the bright, straightforward young Flagler of
those days with satisfaction. At the time when
we bought certain refineries at Cleveland he was very
active. One day he met an old friend on the street,
a German baker, to whom he had sold flour in years
gone by. His friend told him that he had gone
out of the bakery business and had built a little refinery.
This surprised Mr. Flagler, and he didn’t like
the idea of his friend investing his little fortune
in a small plant which he felt sure would not succeed.
But at first there seemed nothing to do about it.
He had it on his mind for some days. It evidently
troubled him. Finally he came to me and said:

Page 6

“That little baker man knows more about baking
than oil refining, but I’d feel better if we
invited him to join us—­I’ve got him
on my conscience.”

I of course agreed. He talked to his friend,
who said he would gladly sell if we would send an
appraiser to value his plant, which we did, and then
there arose an unexpected difficulty. The price
at which the plant was to be purchased was satisfactory,
but the ex-baker insisted that Mr. Flagler should
advise him whether he should take his pay in cash
or Standard Oil certificates at par. He told Mr.
Flagler that if he took it in cash it would pay all
his debts, and he would be glad to have his mind free
of many anxieties; but if Mr. Flagler said the certificates
were going to pay good dividends, he wanted to get
into and keep up with a good thing. It was rather
a hard proposition to put up to Mr. Flagler, and at
first he declined to advise or express any opinion,
but the German stuck to him and wouldn’t let
him shirk a responsibility which in no way belonged
to him. Finally Mr. Flagler suggested that he
take half the amount in cash and pay 50 per cent. on
account of his debts, and put the other half in certificates,
and see what happened. This he did, and as time
went on he bought more certificates, and Mr. Flagler
never had to apologize for the advice he gave him.
I am confident that my old partner gave this affair
as much time and thought as he did to any of his own
large problems, and the incident may be taken as a
measure of the man.

THE VALUE OF FRIENDSHIPS

But these old men’s tales can hardly be interesting
to the present generation, though perhaps they will
not be useless if even tiresome stories make young
people realize how, above all other possessions, is
the value of a friend in every department of life without
any exception whatsoever.

How many different kinds of friends there are!
They should all be held close at any cost; for, although
some are better than others, perhaps, a friend of
whatever kind is important; and this one learns as
one grows older. There is the kind that when
you need help has a good reason just at the moment,
of course, why it is impossible to extend it.

“I can’t indorse your note,” he
says, “because I have an agreement with my partners
not to.”

“I’d like to oblige you, but I can explain
why at the moment,” etc., etc.

I do not mean to criticize this sort of friendship;
for sometimes it is a matter of temperament; and sometimes
the real necessities are such that the friend cannot
do as he would like to do. As I look back over
my friends, I can remember only a few of this kind
and a good many of the more capable sort. One
especial friend I had. His name was S.V.
Harkness, and from the first of our acquaintance he
seemed to have every confidence in me.

Page 7

One day our oil warehouses and refinery burned to
the ground in a few hours—­they were absolutely
annihilated. Though they were insured for many
hundred thousands of dollars, of course, we were apprehensive
about collecting such a large amount of insurance,
and feared it might take some time to arrange.
That plant had to be rebuilt right away, and it was
necessary to lay the financial plans. Mr. Harkness
was interested with us in the business, and I said
to him:

“I may want to call upon you for the use of
some money. I don’t know that we shall
need it, but I thought I’d speak to you in advance
about it.”

He took in the situation without much explaining on
my part. He simply heard what I had to say and
he was a man of very few words.

“All right, J.D., I’ll give you all I’ve
got.” This was all he said, but I went
home that night relieved of anxiety. As it turned
out, we received the check of the Liverpool, London
& Globe Insurance Company for the full amount before
the builders required the payments; and while we didn’t
need his money, I never shall forget the whole-souled
way in which he offered it.

And this sort of experience was not, I am grateful
to say, rare with me. I was always a great borrower
in my early days; the business was active and growing
fast, and the banks seemed very willing to loan me
the money. About this time, when our great fire
had brought up some new conditions, I was studying
the situation to see what our cash requirements would
be. We were accustomed to prepare for financial
emergencies long before we needed the funds.

Another incident occurred at this time which showed
again the kind of real friends we had in those days,
but I did not hear the full story of it until long
years after the event.

There was one bank where we had done a great deal
of business, and a friend of mine, Mr. Stillman Witt,
who was a rich man, was one of the directors.
At a meeting, the question came up as to what the bank
would do in case we wanted more money. In order
that no one might doubt his own position on the subject,
Mr. Witt called for his strong-box, and said:

“Here, gentlemen, these young men are all O.K.,
and if they want to borrow more money I want to see
this bank advance it without hesitation, and if you
want more security, here it is; take what you want.”

We were then shipping a large quantity of oil by lake
and canal, to save in transportation, and it took
additional capital to carry these shipments; and we
required to borrow a large amount of money. We
had already made extensive loans from another bank,
whose president informed me that his board of directors
had been making inquiries respecting our large line
of discounts, and had stated that they would probably
want to talk with me on the subject. I answered
that I would be very glad of the opportunity to meet
the board, as we would require a great deal more money
from the bank. Suffice it to say, we got all
we wanted, but I was not asked to call for any further
explanations.

Page 8

But I fear I am telling too much about banks and money
and business. I know of nothing more despicable
and pathetic than a man who devotes all the waking
hours of the day to making money for money’s
sake. If I were forty years younger, I should
like to go into business again, for the association
with interesting and quick-minded men was always a
great pleasure. But I have no dearth of interests
to fill my days, and so long as I live I expect to
go on and develop the plans which have been my inspiration
for a lifetime.

During all the long period of work, which lasted from
the time I was sixteen years old until I retired from
active business when I was fifty-five, I must admit
that I managed to get a good many vacations of one
kind or another, because of the willingness of my most
efficient associates to assume the burdens of the business
which they were so eminently qualified to conduct.

Of detail work I feel I have done my full share.
As I began my business life as a bookkeeper, I learned
to have great respect for figures and facts, no matter
how small they were. When there was a matter
of accounting to be done in connection with any plan
with which I was associated in the earlier years,
I usually found that I was selected to undertake it.
I had a passion for detail which afterward I was forced
to strive to modify.

At Pocantico Hills, New York, where I have spent portions
of my time for many years in an old house where the
fine views invite the soul and where we can live simply
and quietly, I have spent many delightful hours, studying
the beautiful views, the trees, and fine landscape
effects of that very interesting section of the Hudson
River, and this happened in the days when I seemed
to need every minute for the absorbing demands of
business. So I fear after I got well started,
I was not what might be called a diligent business
man.

This phrase, “diligent in business,” reminds
me of an old friend of mine in Cleveland who was devoted
to his work. I talked to him, and no doubt bored
him unspeakably, on my special hobby, which has always
been what some people call landscape gardening, but
which with me is the art of laying out roads and paths
and work of that kind. This friend of thirty-five
years ago plainly disapproved of a man in business
wasting his time on what he looked upon as mere foolishness.

One superb spring day I suggested to him that he should
spend the afternoon with me (a most unusual and reckless
suggestion for a business man to make in those days)
and see some beautiful paths through the woods on
my place which I had been planning and had about completed.
I went so far as to tell him that I would give him
a real treat.

“I cannot do it, John,” he said, “I
have an important matter of business on hand this
afternoon.”

“That may all be,” I urged, “but
it will give you no such pleasure as you’ll
get when you see those paths—­the big tree
on each side and ——­”

Page 9

“Go on, John, with your talk about trees and
paths. I tell you I’ve got an ore ship
coming in and our mills are waiting for her.”
He rubbed his hands with satisfaction—­“I’d
not miss seeing her come in for all the wood paths
in Christendom.” He was then getting $120
to $130 a ton for Bessemer steel rails, and if his
mill stopped a minute waiting for ore, he felt that
he was missing his life’s chance.

Perhaps it was this same man who often gazed out into
the lake with every nerve stretched to try to see
an ore ship approaching. One day one of his friends
asked him if he could see the boat.

“No-o, no-o,” he reluctantly admitted,
“but she’s most in sight.”

This ore trade was of great and absorbing interest
at Cleveland. My old employer was paid $4 a ton
for carrying ore from the Marquette regions fifty
years ago, and to think of the wickedness of this maker
of woodland paths, who in later years was moving the
ore in great ships for eighty cents a ton and making
a fortune at it.

All this reminds me of my experiences in the ore business,
but I shall come to that later. I want to say
something about landscape gardening, to which I have
devoted a great deal of time for more than thirty
years.

THE PLEASURES OF ROAD PLANNING

Like my old friend, others may be surprised at my
claim to be an amateur landscape architect in a small
way, and my family have been known to employ a great
landscape man to make quite sure that I did not ruin
the place. The problem was, just where to put
the new home at Pocantico Hills, which has recently
been built. I thought I had the advantage of
knowing every foot of the land, all the old big trees
were personal friends of mine, and with the views of
any given point I was perfectly familiar—­I
had studied them hundreds of times; and after this
great landscape architect had laid out his plans and
had driven his lines of stakes, I asked if I might
see what I could do with the job.

In a few days I had worked out a plan so devised that
the roads caught just the best views at just the angles
where in driving up the hill you came upon impressive
outlooks, and at the ending was the final burst of
river, hill, cloud, and great sweep of country to crown
the whole; and here I fixed my stakes to show where
I suggested that the roads should run, and finally
the exact place where the house should be.

“Look it all over,” I said, “and
decide which plan is best.” It was a proud
moment when this real authority accepted my suggestions
as bringing out the most favoured spots for views
and agreed upon the site of the house. How many
miles of roads I have laid out in my time, I can hardly
compute, but I have often kept at it until I was exhausted.
While surveying roads, I have run the lines until darkness
made it impossible to see the little stakes and flags.
It is all very vain of me to tell of these landscape
enterprises, but perhaps they will offset the business
talks which occupy so much of my story.

Page 10

My methods of attending to business matters differed
from those of most well-conducted merchants of my
time and allowed me more freedom. Even after
the chief affairs of the Standard Oil Company were
moved to New York, I spent most of my summers at our
home in Cleveland, and I do still. I would come
to New York when my presence seemed necessary, but
for the most part I kept in touch with the business
through our own telegraph wires, and was left free
to attend to many things which interested me—­among
others, the making of paths, the planting of trees,
and the setting out of little forests of seedlings.

Of all the profitable things which develop quickly
under the hand, I have thought my young nurseries
show the greatest yield. We keep a set of account
books for each place, and I was amazed not long ago
at the increase in value that a few years make in
growing things, when we came to remove some young
trees from Westchester County to Lakewood, New Jersey.
We plant our young trees, especially evergreens, by
the thousand—­I think we have put in as
many as ten thousand at once, and let them develop,
to be used later in some of our planting schemes.
If we transfer young trees from Pocantico to our home
in Lakewood, we charge one place and credit the other
for these trees at the market rate. We are our
own best customers, and we make a small fortune out
of ourselves by selling to our New Jersey place at
$1.50 or $2.00 each, trees which originally cost us
only five or ten cents at Pocantico.

In nursery stock, as in other things, the advantage
of doing things on a large scale reveals itself.
The pleasure and satisfaction of saving and moving
large trees—­trees, say, from ten to twenty
inches in diameter, or even more in some cases—­has
been for years a source of great interest. We
build our movers ourselves, and work with our own
men, and it is truly surprising what liberties you
can take with trees, if you once learn how to handle
these monsters. We have moved trees ninety feet
high, and many seventy or eighty feet. And they
naturally are by no means young. At one time or
another we have tried almost all kinds of trees, including
some which the authorities said could not be moved
with success. Perhaps the most daring experiments
were with horse-chestnuts. We took up large trees,
transported them considerable distances, some of them
after they were actually in flower, all at a cost
of twenty dollars per tree, and lost very few.
We were so successful that we became rather reckless,
trying experiments out of season, but when we worked
on plans we had already tried, our results were remarkably
satisfactory.

Page 11

Taking our experiences in many hundreds of trees of
various kinds in and out of season, and including
the time when we were learning the art, our total
loss has been something less than 10 per cent., probably
more nearly 6 or 7 per cent. A whole tree-moving
campaign in a single season has been accomplished
with a loss of about 3 per cent. I am willing
to admit that in the case of the larger trees the growth
has been retarded perhaps two years, but this is a
small matter, for people no longer young wish to get
the effects they desire at once, and the modern tree-mover
does it. We have grouped and arranged clumps
of big spruces to fit the purposes we were aiming for,
and sometimes have completely covered a hillside with
them. Oaks we have not been successful with except
when comparatively young, and we don’t try to
move oaks and hickories when they have come near to
maturity; but we have made some successful experiments
with bass wood, and one of these we have moved three
times without injury. Birches have generally
baffled us, but evergreens, except cedars, have been
almost invariably successfully handled.

This planning for good views must have been an early
passion with me. I remember when I was hardly
more than a boy I wanted to cut away a big tree which
I thought interfered with the view from the windows
of the dining-room of our home. I was for cutting
it down, but some other members of the family objected,
though my dear mother, I think, sympathized with me,
as she said one day: “You know, my son,
we have breakfast at eight o’clock, and I think
if the tree were felled some time before we sat down
to table, there would probably be no great complaint
when the family saw the view which the fallen tree
revealed.”

So it turned out.

CHAPTER II

THE DIFFICULT ART OF GETTING

To my father I owe a great debt in that he himself
trained me to practical ways. He was engaged
in different enterprises; he used to tell me about
these things, explaining their significance; and he
taught me the principles and methods of business.
From early boyhood I kept a little book which I remember
I called Ledger A—­and this little volume
is still preserved—­containing my receipts
and expenditures as well as an account of the small
sums that I was taught to give away regularly.

Naturally, people of modest means lead a closer family
life than those who have plenty of servants to do
everything for them. I count it a blessing that
I was of the former class. When I was seven or
eight years old I engaged in my first business enterprise
with the assistance of my mother. I owned some
turkeys, and she presented me with the curds from
the milk to feed them. I took care of the birds
myself, and sold them all in business-like fashion.
My receipts were all profit, as I had nothing to do
with the expense account, and my records were kept
as carefully as I knew how.

Page 12

We thoroughly enjoyed this little business affair,
and I can still close my eyes, and distinctly see
the gentle and dignified birds walking quietly along
the brook and through the woods, cautiously stealing
the way to their nests. To this day I enjoy the
sight of a flock of turkeys, and never miss an opportunity
of studying them.

My mother was a good deal of a disciplinarian, and
upheld the standard of the family with a birch switch
when it showed a tendency to deteriorate. Once,
when I was being punished for some unfortunate doings
which had taken place in the village school, I felt
called upon to explain after the whipping had begun
that I was innocent of the charge.

“Never mind,” said my mother, “we
have started in on this whipping, and it will do for
the next time.” This attitude was maintained
to its final conclusion in many ways. One night,
I remember, we boys could not resist the temptation
to go skating in the moonlight, notwithstanding the
fact that we had been expressly forbidden to skate
at night. Almost before we got fairly started
we heard a cry for help, and found a neighbour, who
had broken through the ice, was in danger of drowning.
By pushing a pole to him we succeeded in fishing him
out, and restored him safe and sound to his grateful
family. As we were not generally expected to
save a man’s life every time we skated, my brother
William and I felt that there were mitigating circumstances
connected with this particular disobedience which might
be taken into account in the final judgment, but this
idea proved to be erroneous.

STARTING AT WORK

Although the plan had been to send me to college,
it seemed best at sixteen that I should leave the
high school in which I had nearly completed the course
and go into a commercial college in Cleveland for
a few months. They taught bookkeeping and some
of the fundamental principles of commercial transactions.
This training, though it lasted only a few months,
was very valuable to me. But how to get a job—­that
was the question. I tramped the streets for days
and weeks, asking merchants and storekeepers if they
didn’t want a boy; but the offer of my services
met with little appreciation. No one wanted a
boy, and very few showed any overwhelming anxiety
to talk with me on the subject. At last one man
on the Cleveland docks told me that I might come back
after the noonday meal. I was elated; it now seemed
that I might get a start.

I was in a fever of anxiety lest I should lose this
one opportunity that I had unearthed. When finally
at what seemed to me the time, I presented myself
to my would-be employer:

“We will give you a chance,” he said,
but not a word passed between us about pay. This
was September 26, 1855. I joyfully went to work.
The name of the firm was Hewitt & Tuttle.

In beginning the work I had some advantages.
My father’s training, as I have said, was practical,
the course at the commercial college had taught me
the rudiments of business, and I thus had a groundwork
to build upon. I was fortunate, also, in working
under the supervision of the bookkeeper, who was a
fine disciplinarian, and well disposed toward me.

Page 13

When January, 1856, arrived, Mr. Tuttle presented
me with $50 for my three months’ work, which
was no doubt all that I was worth, and it was entirely
satisfactory.

For the next year, with $25 a month, I kept my position,
learning the details and clerical work connected with
such a business. It was a wholesale produce commission
and forwarding concern, my department being particularly
the office duties. Just above me was the bookkeeper
for the house, and he received $2,000 a year salary
in lieu of his share of the profits of the firm of
which he was a member. At the end of the first
fiscal year when he left I assumed his clerical and
bookkeeping work, for which I received the salary of
$500.

As I look back upon this term of business apprenticeship,
I can see that its influence was vitally important
in its relations to what came after.

To begin with, my work was done in the office of the
firm itself. I was almost always present when
they talked of their affairs, laid out their plans,
and decided upon a course of action. I thus had
an advantage over other boys of my age, who were quicker
and who could figure and write better than I. The
firm conducted a business with so many ramifications
that this education was quite extensive. They
owned dwelling-houses, warehouses, and buildings which
were rented for offices and a variety of uses, and
I had to collect the rents. They shipped by rail,
canal, and lake. There were many different kinds
of negotiations and transactions going on, and with
all these I was in close touch.

Thus it happened that my duties were vastly more interesting
than those of an office-boy in a large house to-day.
I thoroughly enjoyed the work. Gradually the
auditing of accounts was left in my hands. All
the bills were first passed upon by me, and I took
this duty very seriously.

One day, I remember, I was in a neighbour’s
office, when the local plumber presented himself with
a bill about a yard long. This neighbour was
one of those very busy men. He was connected with
what seemed to me an unlimited number of enterprises.
He merely glanced at this tiresome bill, turned to
the bookkeeper, and said:

“Please pay this bill.”

As I was studying the same plumber’s bills in
great detail, checking every item, if only for a few
cents, and finding it to be greatly to the firm’s
interest to do so, this casual way of conducting affairs
did not appeal to me. I had trained myself to
the point of view doubtless held by many young men
in business to-day, that my check on a bill was the
executive act which released my employer’s money
from the till and was attended with more responsibility
than the spending of my own funds. I made up
my mind that such business methods could not succeed.

Passing bills, collecting rents, adjusting claims,
and work of this kind brought me in association with
a great variety of people. I had to learn how
to get on with all these different classes, and still
keep the relations between them and the house pleasant.
One particular kind of negotiation came to me which
took all the skill I could master to bring to a successful
end.

Page 14

We would receive, for example, a shipment of marble
from Vermont to Cleveland. This involved handling
by railroad, canal, and lake boats. The cost
of losses or damage had to be somehow fixed between
these three different carriers, and it taxed all the
ingenuity of a boy of seventeen to work out this problem
to the satisfaction of all concerned, including my
employers. But I thought the task no hardship,
and so far as I can remember I never had any disagreement
of moment with any of these transportation interests.
This experience in conducting all sorts of transactions
at such an impressionable age, with the helping hand
of my superiors to fall back upon in an emergency—­was
highly interesting to me. It was my first step
in learning the principle of negotiation, of which
I hope to speak later.

The training that comes from working for some one
else, to whom we feel a responsibility, I am sure
was of great value to me.

I should estimate that the salaries of that time were
far less than half of what is paid for equivalent
positions to-day. The next year I was offered
a salary of $700, but thought I was worth $800.
We had not settled the matter by April, and as a favourable
opportunity had presented itself for carrying on the
same business on my own account, I resigned my position.

In those days, in Cleveland, everyone knew almost
everyone else in town. Among the merchants was
a young Englishman named M.B. Clark, perhaps
ten years older than I, who wanted to establish a business
and was in search of a partner. He had $2,000
to contribute to the firm, and wanted a partner who
could furnish an equal amount. This seemed a
good opportunity for me. I had saved up $700 or
$800, but where to get the rest was a problem.

I talked the matter over with my father, who told
me that he had always intended to give $1,000 to each
of his children when they reached twenty-one.
He said that if I wished to receive my share at once,
instead of waiting, he would advance it to me and I
could pay interest upon the sum until I was twenty-one.

“But, John,” he added, “the rate
is ten.”

At that time, 10 per cent. a year interest was a very
common rate for such loans. At the banks the
rate might not have been quite so high; but of course
the financial institutions could not supply all the
demands, so there was much private borrowing at high
figures. As I needed this money for the partnership,
I gladly accepted my father’s offer, and so
began business as the junior partner of the new firm,
which was called Clark & Rockefeller.

It was a great thing to be my own employer. Mentally
I swelled with pride—­a partner in a firm
with $4,000 capital! Mr. Clark attended to the
buying and selling, and I took charge of the finance
and the books. We at once began to do a large
business, dealing in carload lots and cargoes of produce.
Naturally we soon needed more money to take care of
the increasing trade. There was nothing to do
but to attempt to borrow from a bank. But would
the bank lend to us?

Page 15

THE FIRST LOAN

I went to a bank president whom I knew, and who knew
me. I remember perfectly how anxious I was to
get that loan and to establish myself favourably with
the banker. This gentleman was T.P. Handy,
a sweet and gentle old man, well known as a high-grade,
beautiful character. For fifty years he was interested
in young men. He knew me as a boy in the Cleveland
schools. I gave him all the particulars of our
business, telling him frankly about our affairs—­what
we wanted to use the money for, etc., etc.
I waited for the verdict with almost trembling eagerness.

“How much do you want?” he said.

“Two thousand dollars.”

“All right, Mr. Rockefeller, you can have it,”
he replied. “Just give me your own warehouse
receipts; they’re good enough for me.”

As I left that bank, my elation can hardly be imagined.
I held up my head—­think of it, a bank had
trusted me for $2,000! I felt that I was now
a man of importance in the community.

For long years after the head of this bank was a friend
indeed; he loaned me money when I needed it, and I
needed it almost all the time, and all the money he
had. It was a source of gratification that later
I was able to go to him and recommend that he should
make a certain investment in Standard Oil stock.
He agreed that he would like to do so, but he said
that the sum involved was not at the moment available,
and so at my suggestion I turned banker for him, and
in the end he took out his principal with a very handsome
profit. It is a pleasure to testify even at this
late date to his great kindness and faith in me.

STICKING TO BUSINESS PRINCIPLES

Mr. Handy trusted me because he believed we would
conduct our young business on conservative and proper
lines, and I well remember about this time an example
of how hard it is sometimes to live up to what one
knows is the right business principle. Not long
after our concern was started our best customer—­that
is, the man who made the largest consignments—­asked
that we should allow him to draw in advance on current
shipments before the produce or a bill of lading were
actually in hand. We, of course, wished to oblige
this important man, but I, as the financial member
of the firm, objected, though I feared we should lose
his business.

The situation seemed very serious; my partner was
impatient with me for refusing to yield, and in this
dilemma I decided to go personally to see if I could
not induce our customer to relent. I had been
unusually fortunate when I came face to face with men
in winning their friendship, and my partner’s
displeasure put me on my mettle. I felt that
when I got into touch with this gentleman I could convince
him that what he proposed would result in a bad precedent.
My reasoning (in my own mind) was logical and convincing.
I went to see him, and put forth all the arguments
that I had so carefully thought out. But he stormed
about, and in the end I had the further humiliation
of confessing to my partner that I had failed.
I had been able to accomplish absolutely nothing.

Page 16

Naturally, he was very much disturbed at the possibility
of losing our most valued connection, but I insisted
and we stuck to our principles and refused to give
the shipper the accommodation he had asked. What
was our surprise and gratification to find that he
continued his relations with us as though nothing
had happened, and did not again refer to the matter.
I learned afterward that an old country banker, named
John Gardener, of Norwalk, O., who had much to do with
our consignor, was watching this little matter intently,
and I have ever since believed that he originated
the suggestion to tempt us to do what we stated we
did not do as a test, and his story about our firm
stand for what we regarded as sound business principles
did us great good.

About this time I began to go out and solicit business—­a
branch of work I had never before attempted.
I undertook to visit every person in our part of the
country who was in any way connected with the kind
of business that we were engaged in, and went pretty
well over the states of Ohio and Indiana. I made
up my mind that I could do this best by simply introducing
our firm, and not pressing for immediate consignments.
I told them that I represented Clark & Rockefeller,
commission merchants, and that I had no wish to interfere
with any connection that they had at present, but
if the opportunity offered we should be glad to serve
them, etc., etc.

To our great surprise, business came in upon us so
fast that we hardly knew how to take care of it, and
in the first year our sales amounted to half a million
dollars.

Then, and indeed for many years after, it seemed as
though there was no end to the money needed to carry
on and develop the business. As our successes
began to come, I seldom put my head upon the pillow
at night without speaking a few words to myself in
this wise:

“Now a little success, soon you will fall down,
soon you will be overthrown. Because you have
got a start, you think you are quite a merchant; look
out, or you will lose your head—­go steady.”
These intimate conversations with myself, I am sure,
had a great influence on my life. I was afraid
I could not stand my prosperity, and tried to teach
myself not to get puffed up with any foolish notions.

My loans from my father were many. Our relations
on finances were a source of some anxiety to me, and
were not quite so humorous as they seem now as I look
back at them. Occasionally he would come to me
and say that if I needed money in the business he
would be able to loan some, and as I always needed
capital I was glad indeed to get it, even at 10 per
cent. interest. Just at the moment when I required
the money most he was apt to say:

“My son, I find I have got to have that money.”

“Of course, you shall have it at once,”
I would answer, but I knew that he was testing me,
and that when I paid him, he would hold the money
without its earning anything for a little time, and
then offer it back later. I confess that this
little discipline should have done me good, and perhaps
did, but while I concealed it from him, the truth
is I was not particularly pleased with his application
of tests to discover if my financial ability was equal
to such shocks.

Page 17

INTEREST AT 10 PER CENT.

These experiences with my father remind me that in
the early days there was often much discussion as
to what should be paid for the use of money.
Many people protested that the rate of 10 per cent.
was outrageous, and none but a wicked man would exact
such a charge. I was accustomed to argue that
money was worth what it would bring—­no one
would pay 10 per cent., or 5 per cent., or 8 per cent.
unless the borrower believed that at this rate it
was profitable to employ it. As I was always
the borrower at that time, I certainly did not argue
for paying more than was necessary.

Among the most persistent and heated discussions I
ever had were those with the dear old lady who kept
the boarding-house where my brother William and I
lived when we were away from home at school. I
used to greatly enjoy these talks, for she was an
able woman and a good talker, and as she charged us
only a dollar a week for board and lodging, and fed
us well, I certainly was her friend. This was
about the usual price for board in the small towns
in those days, where the produce was raised almost
entirely on the place.

This estimable lady was violently opposed to loaners
obtaining high rates of interest, and we had frequent
and earnest arguments on the subject. She knew
that I was accustomed to make loans for my father,
and she was familiar with the rates secured. But
all the arguments in the world did not change the
rate, and it came down only when the supply of money
grew more plentiful.

I have usually found that important alterations in
public opinion in regard to business matters have
been of slow growth along the line of proved economic
theory—­very rarely have improvements in
these relationships come about through hastily devised
legislation.

One can hardly realize how difficult it was to get
capital for active business enterprises at that time.
In the country farther west much higher rates were
paid, which applied usually to personal loans on which
a business risk was run, but it shows how different
the conditions for young business men were then than
now.

A NIMBLE BORROWER

Speaking of borrowing at the banks reminds me of one
of the most strenuous financial efforts I ever made.
We had to raise the money to accept an offer for a
large business. It required many hundreds of
thousands of dollars—­and in cash—­securities
would not answer. I received the message at about
noon and had to get off on the three-o’clock
train. I drove from bank to bank, asking each
president or cashier, whomever I could find first,
to get ready for me all the funds he could possibly
lay hands on. I told them I would be back to
get the money later. I rounded up all of our banks
in the city, and made a second journey to get the
money, and kept going until I secured the necessary
amount. With this I was off on the three-o’clock
train, and closed the transaction. In these early
days I was a good deal of a traveller, visiting our
plants, making new connections, seeing people, arranging
plans to extend our business—­and it often
called for very rapid work.

Page 18

RAISING CHURCH FUNDS

When I was but seventeen or eighteen I was elected
as a trustee in the church. It was a mission
branch, and occasionally I had to hear members who
belonged to the main body speak of the mission as though
it were not quite so good as the big mother church.
This strengthened our resolve to show them that we
could paddle our own canoe.

Our first church was not a very grand affair, and
there was a mortgage of $2,000 on it which had been
a dispiriting influence for years.

The holder of the mortgage had long demanded that
he should be paid, but somehow even the interest was
barely kept up, and the creditor finally threatened
to sell us out. As it happened, the money had
been lent by a deacon in the church, but notwithstanding
this fact, he felt that he should have his money,
and perhaps he really needed it. Anyhow, he proposed
to take such steps as were necessary to get it.
The matter came to a head one Sunday morning, when
the minister announced from the pulpit that the $2,000
would have to be raised, or we should lose our church
building. I therefore found myself at the door
of the church as the congregation came and went.

As each member came by I buttonholed him, and got
him to promise to give something toward the extinguishing
of that debt. I pleaded and urged, and almost
threatened. As each one promised, I put his name
and the amount down in my little book, and continued
to solicit from every possible subscriber.

This campaign for raising the money which started
that morning after church, lasted for several months.
It was a great undertaking to raise such a sum of
money in small amounts ranging from a few cents to
the more magnificent promises of gifts to be paid
at the rate of twenty-five or fifty cents per week.
The plan absorbed me. I contributed what I could,
and my first ambition to earn more money was aroused
by this and similar undertakings in which I was constantly
engaged.

But at last the $2,000 was all in hand and a proud
day it was when the debt was extinguished. I
hope the members of the mother church were properly
humiliated to see how far we had gone beyond their
expectations, but I do not now recall that they expressed
the surprise that we flattered ourselves they must
have felt.

The begging experiences I had at that time were full
of interest. I went at the task with pride rather
than the reverse, and I continued it until my increasing
cares and responsibilities compelled me to resign
the actual working out of details to others.

CHAPTER III

THE STANDARD OIL COMPANY

It would be surprising if in an organization which
included a great number of men there should not be
an occasional employee here and there who acted, in
connection with the business or perhaps in conducting
his own affairs, in a way which might be criticized.
Even in a comparatively small organization it is wellnigh
impossible to restrain this occasional man who is
over-zealous for his own or his company’s advancement.
To judge the character of all the members of a great
organization or the organization itself by the actions
of a few individuals would be manifestly unfair.

Page 19

It has been said that I forced the men who became
my partners in the oil business to join with me.
I would not have been so short-sighted. If it
were true that I followed such tactics, I ask, would
it have been possible to make of such men life-long
companions? Would they accept, and remain for
many years in positions of the greatest trust, and
finally, could any one have formed of such men, if
they had been so browbeaten, a group which has for
all these years worked in loyal harmony, with fair
dealing among themselves as well as with others, building
up efficiency and acting in entire unity? This
powerful organization has not only lasted but its
efficiency has increased. For fourteen years
I have been out of business, and in eight or ten years
went only once to the company’s office.

In the summer of 1907 I visited again the room at
the top of the Standard Oil Company’s building,
where the officers of the company and the heads of
departments have had their luncheon served for many
years. I was surprised to find so many men who
had come to the front since my last visit years ago.
Afterward I had an opportunity to talk with old associates
and many new ones, and it was a source of great gratification
to me to find that the same spirit of cooeperation
and harmony existed unchanged. This practice
of lunching together, a hundred or more at long tables
in most intimate and friendly association, is another
indication of what I contend, slight as it may seem
to be at first thought. Would these people seek
each other’s companionship day after day if
they had been forced into this relation? People
in such a position do not go on for long in a pleasant
and congenial intimacy.

For years the Standard Oil Company has developed step
by step, and I am convinced that it has done well
its work of supplying to the people the products from
petroleum at prices which have decreased as the efficiency
of the business has been built up. It gradually
extended its services first to the large centres,
and then to towns, and now to the smallest places,
going to the homes of its customers, delivering the
oil to suit the convenience of the actual users.
This same system is being followed out in various
parts of the world. The company has, for example,
three thousand tank wagons supplying American oil to
towns and even small hamlets in Europe. Its own
depots and employees deliver it in a somewhat similar
way in Japan, China, India, and the chief countries
of the world. Do you think this trade has been
developed by anything but hard work?

This plan of selling our products direct to the consumer
and the exceptionally rapid growth of the business
bred a certain antagonism which I suppose could not
have been avoided, but this same idea of dealing with
the consumer directly has been followed by others and
in many lines of trade, without creating, so far as
I recall, any serious opposition.

Page 20

This is a very interesting and important point, and
I have often wondered if the criticism which centred
upon us did not come from the fact that we were among
the first, if not the first, to work out the problems
of direct selling to the user on a broad scale.
This was done in a fair spirit and with due consideration
for everyone’s rights. We did not ruthlessly
go after the trade of our competitors and attempt
to ruin it by cutting prices or instituting a spy system.
We had set ourselves the task of building up as rapidly
and as broadly as possible the volume of consumption.
Let me try to explain just what happened.

To get the advantage of the facilities we had in manufacture,
we sought the utmost market in all lands—­we
needed volume. To do this we had to create selling
methods far in advance of what then existed; we had
to dispose of two, or three, or four gallons of oil
where one had been sold before, and we could not rely
upon the usual trade channels then existing to accomplish
this. It was never our purpose to interfere with
a dealer who adequately cultivated his field of operations,
but when we saw a new opportunity or a new place for
extending the sale by further and effective facilities,
we made it our business to provide them. In this
way we opened many new lines in which others have
shared. In this development we had to employ many
comparatively new men. The ideal way to supply
material for higher positions is, of course, to recruit
the men from among the youngest in the company’s
service, but our expansion was too rapid to permit
this in all cases. That some of these employees
were over-zealous in going after sales it would not
be surprising to learn, but they were acting in violation
of the expressed and known wishes of the company.
But even these instances, I am convinced, occurred
so seldom, by comparison with the number of transactions
we carried on, that they were really the exceptions
that proved the rule.

Every week in the year for many, many years, this
concern has brought into this country more than a
million dollars gold, all from the products produced
by American labour. I am proud of the record,
and believe most Americans will be when they understand
some things better. These achievements, the development
of this great foreign trade, the owning of ships to
carry the oil in bulk by the most economical methods,
the sending out of men to fight for the world’s
markets, have cost huge sums of money, and the vast
capital employed could not be raised nor controlled
except by such an organization as the Standard is
to-day.

To give a true picture of the early conditions, one
must realize that the oil industry was considered
a most hazardous undertaking, not altogether unlike
the speculative mining undertakings we hear so much
of to-day. I well remember my old and distinguished
friend, Rev. Thomas W. Armitage, for some forty years
pastor of a great New York church, warning me that
it was worse than folly to extend our plants and our
operations. He was sure we were running unwarranted
risks, that our oil supply would probably fail, the
demand would decline, and he, with many others, sometimes
I thought almost everybody, prophesied ruin.

Page 21

None of us ever dreamed of the magnitude of what proved
to be the later expansion. We did our day’s
work as we met it, looking forward to what we could
see in the distance and keeping well up to our opportunities,
but laying our foundations firmly. As I have said,
capital was most difficult to secure, and it was not
easy to interest conservative men in this adventurous
business. Men of property were afraid of it,
though in rare cases capitalists were induced to unite
with us to a limited extent. If they bought our
stock at all, they took a little of it now and then
as an experiment, and we were painfully conscious
that they often declined to buy new stock with many
beautiful expressions of appreciation.

The enterprise being so new and novel, on account
of the fearfulness of certain holders in reference
to its success, we frequently had to take stock to
keep it from going begging, but we had such confidence
in the fundamental value of the concern that we were
willing to assume this risk. There are always
a few men in an undertaking of this kind who would
risk all on their judgment of the final result, and
if the enterprise had failed, these would have been
classed as visionary adventurers, and perhaps with
good reason.

The 60,000 men who are at work constantly in the service
of the company are kept busy year in and year out.
The past year has been a time of great contraction,
but the Standard has gone on with its plans unchecked,
and the new works and buildings have not been delayed
on account of lack of capital or fear of bad times.
It pays its workmen well, it cares for them when sick,
and pensions them when old. It has never had
any important strikes, and if there is any better function
of business management than giving profitable work
to employees year after year, in good times and bad,
I don’t know what it is.

Another thing to be remembered about this so-called
“octopus” is that there has been no “water”
introduced into its capital (perhaps we felt that
oil and water would not have mixed); nor in all these
years has any one had to wait for money which the
Standard owed. It has suffered from great fires
and losses, but it has taken care of its affairs in
such a way that it has not found it necessary to appeal
to the general public to place blocks of bonds or
stock; it has used no underwriting syndicates or stock-selling
schemes in any form, and it has always managed to
finance new oil field operations when called upon.

It is a common thing to hear people say that this
company has crushed out its competitors. Only
the uninformed could make such an assertion.
It has and always has had, and always will have, hundreds
of active competitors; it has lived only because it
has managed its affairs well and economically and
with great vigour. To speak of competition for
a minute: Consider not only the able people who
compete in refining oil, but all the competition in
the various trades which make and sell by-products—­a

Page 22

great variety of different businesses. And perhaps
of even more importance is the competition in foreign
lands. The Standard is always fighting to sell
the American product against the oil produced from
the great fields of Russia, which struggles for the
trade of Europe, and the Burma oil, which largely affects
the market in India. In all these various countries
we are met with tariffs which are raised against us,
local prejudices, and strange customs. In many
countries we had to teach the people—­the
Chinese, for example—­to burn oil by making
lamps for them; we packed the oil to be carried by
camels or on the backs of runners in the most remote
portions of the world; we adapted the trade to the
needs of strange folk. Every time we succeeded
in a foreign land, it meant dollars brought to this
country, and every time we failed, it was a loss to
our nation and its workmen.

One of our greatest helpers has been the State Department
in Washington. Our ambassadors and ministers
and consuls have aided to push our way into new markets
to the utmost corners of the world.

I think I can speak thus frankly and enthusiastically
because the working out of many of these great plans
has developed largely since I retired from the business
fourteen years ago.

The Standard has not now, and never did have a royal
road to supremacy, nor is its success due to any one
man, but to the multitude of able men who are working
together. If the present managers of the company
were to relax efforts, allow the quality of their product
to degenerate, or treat their customers badly, how
long would their business last? About as long
as any other neglected business. To read some
of the accounts of the affairs of the company, one
would think that it had such a hold on the oil trade
that the directors did little but come together and
declare dividends. It is a pleasure for me to
take this opportunity to pay tribute to the work these
men are doing, not only for the company they serve,
but for the foreign trade of our country; for more
than half of all the product that the company makes
is sold outside of the United States. If, in place
of these directors, the business were taken over and
run by anyone but experts, I would sell my interest
for any price I could get. To succeed in a business
requires the best and most earnest men to manage it,
and the best men rise to the top. Of its origin
and early plans I will speak later.

THE MODERN CORPORATION

Beyond question there is a suspicion of corporations.
There may be reason for such suspicion very often;
for a corporation may be moral or immoral, just as
a man may be moral or the reverse; but it is folly
to condemn all corporations because some are bad, or
even to be unduly suspicious of all, because some
are bad. But the corporation in form and character
has come to stay—­that is a thing that may
be depended upon. Even small firms are becoming
corporations, because it is a convenient form of partnership.

Page 23

It is equally true that combinations of capital are
bound to continue and to grow, and this need not alarm
even the most timid if the corporation, or the series
of corporations, is properly conducted with due regard
for the rights of others. The day of individual
competition in large affairs is past and gone—­you
might just as well argue that we should go back to
hand labour and throw away our efficient machines—­and
the sober good sense of the people will accept this
fact when they have studied and tried it out.
Just see how the list of stockholders in the great
corporations is increasing by leaps and bounds.
This means that all these people are becoming partners
in great businesses. It is a good thing—­it
will bring a feeling of increased responsibility to
the managers of the corporations and will make the
people who have their interests involved study the
facts impartially before condemning or attacking them.

On this subject of industrial combinations I have
often expressed my opinions; and, as I have not changed
my mind, I am not averse to repeating them now, especially
as the subject seems again to be so much in the public
eye.

The chief advantages from industrial combinations
are those which can be derived from a cooeperation
of persons and aggregation of capital. Much that
one man cannot do alone two can do together, and once
admit the fact that cooeperation, or, what is the
same thing, combination, is necessary on a small scale,
the limit depends solely upon the necessities of business.
Two persons in partnership may be a sufficiently large
combination for a small business, but if the business
grows or can be made to grow, more persons and more
capital must be taken in. The business may grow
so large that a partnership ceases to be a proper
instrumentality for its purposes, and then a corporation
becomes a necessity. In most countries, as in
England, this form of industrial combination is sufficient
for a business co-extensive with the parent country,
but it is not so in America. Our Federal form
of government making every corporation created by a
state foreign to every other state, renders it necessary
for persons doing business through corporate agency
to organize corporations in some or many of the different
states in which their business is located. Instead
of doing business through the agency of one corporation
they must do business through the agencies of several
corporations. If the business is extended to
foreign countries, and Americans are not to-day satisfied
with home markets alone, it will be found helpful and
possibly necessary to organize corporations in such
countries, for Europeans are prejudiced against foreign
corporations, as are the people of many of our states.
These different corporations thus become cooeperating
agencies in the same business and are held together
by common ownership of their stocks.

It is too late to argue about advantages of industrial
combinations. They are a necessity. And
if Americans are to have the privilege of extending
their business in all the states of the Union, and
into foreign countries as well, they are a necessity
on a large scale, and require the agency of more than
one corporation.

Page 24

The dangers are that the power conferred by combination
may be abused, that combinations may be formed for
speculation in stocks rather than for conducting business,
and that for this purpose prices may be temporarily
raised instead of being lowered. These abuses
are possible to a greater or less extent in all combinations,
large or small, but this fact is no more of an argument
against combinations than the fact that steam may
explode is an argument against steam. Steam is
necessary and can be made comparatively safe.
Combination is necessary and its abuses can be minimized;
otherwise our legislators must acknowledge their incapacity
to deal with the most important instrument of industry.

In the hearing of the Industrial Commission in 1899,
I then said that if I were to suggest any legislation
regarding industrial combinations it would be:
First, Federal legislation under which corporations
may be created and regulated, if that be possible.
Second, in lieu thereof, state legislation as nearly
uniform as possible, encouraging combinations of persons
and capital for the purpose of carrying on industries,
but permitting state supervision, not of a character
to hamper industries, but sufficient to prevent frauds
upon the public. I still feel as I did in 1899.

THE NEW OPPORTUNITIES

I am far from believing that this will adversely affect
the individual. The great economic era we are
entering will give splendid opportunity to the young
man of the future. One often hears the men of
this new generation say that they do not have the chances
that their fathers and grandfathers had. How
little they know of the disadvantages from which we
suffered! In my young manhood we had everything
to do and nothing to do it with; we had to hew our
own paths along new lines; we had little experience
to go on. Capital was most difficult to get,
credits were mysterious things. Whereas now we
have a system of commercial ratings, everything was
then haphazard and we suffered from a stupendous war
and all the disasters which followed.

Compare this day with that. Our comforts and
opportunities are multiplied a thousand fold.
The resources of our great land are now actually opening
up and are scarcely touched; our home markets are
vast, and we have just begun to think of the foreign
peoples we can serve—­the people who are
years behind us in civilization. In the East
a quarter of the human race is just awakening.
The men of this generation are entering into a heritage
which makes their fathers’ lives look poverty-stricken
by comparison. I am naturally an optimist, and
when it comes to a statement of what our people will
accomplish in the future, I am unable to express myself
with sufficient enthusiasm.

There are many things we must do to attain the highest
benefit from all these great blessings; and not the
least of these is to build up our reputation throughout
the whole world.

Page 25

The great business interests will, I hope, so comport
themselves that foreign capital will consider it a
desirable thing to hold shares in American companies.
It is for Americans to see that foreign investors
are well and honestly treated, so that they will never
regret purchases of our securities.

I may speak thus frankly, because I am an investor
in many American enterprises, but a controller of
none (with one exception, and that a company which
has not been much of a dividend payer), and I, like
all the rest, am dependent upon the honest and capable
administration of the industries. I firmly and
sincerely believe that they will be so managed.

THE AMERICAN BUSINESS MAN

You hear a good many people of pessimistic disposition
say much about greed in American life. One would
think to hear them talk that we were a race of misers
in this country. To lay too much stress upon the
reports of greed in the newspapers would be folly,
since their function is to report the unusual and
even the abnormal. When a man goes properly about
his daily affairs, the public prints say nothing;
it is only when something extraordinary happens to
him that he is discussed. But because he is thus
brought into prominence occasionally, you surely would
not say that these occasions represented his normal
life. It is by no means for money alone that
these active-minded men labour—­they are
engaged in a fascinating occupation. The zest
of the work is maintained by something better than
the mere accumulation of money, and, as I think I have
said elsewhere, the standards of business are high
and are getting better all the time.

I confess I have no sympathy with the idea so often
advanced that our basis of all judgments in this country
is founded on money. If this were true, we should
be a nation of money hoarders instead of spenders.
Nor do I admit that we are so small-minded a people
as to be jealous of the success of others. It
is the other way about: we are the most extraordinarily
ambitious, and the success of one man in any walk
of life spurs the others on. It does not sour
them, and it is a libel even to suggest so great a
meanness of spirit.

In reading the newspapers, where so much is taken
for granted in considering things on a money standard,
I think we need some of the sense of humour possessed
by an Irish neighbour of mine, who built what we regarded
as an extremely ugly house, which stood out in bright
colours as we looked from our windows. My taste
in architecture differed so widely from that affected
by my Irish friend, that we planted out the view of
his house by moving some large trees to the end of
our property. Another neighbour who watched this
work going on asked Mr. Foley why Mr. Rockefeller
moved all these big trees and cut off the view between
the houses. Foley, with the quick wit of his
country, responded instantly: “It’s
invy, they can’t stand looking at the ividence
of me prosperity.”

Page 26

In my early days men acted just as they do now, no
doubt. When there was anything to be done for
general trade betterment, almost every man had some
good reason for believing that his case was a special
one different from all the rest. For every foolish
thing he did, or wanted to do, for every unbusiness-like
plan he had, he always pleaded that it was necessary
in his case. He was the one man who had to sell
at less than cost, to disrupt all the business plans
of others in his trade, because his individual position
was so absolutely different from all the rest.
It was often a heart-breaking undertaking to convince
those men that the perfect occasion which would lead
to the perfect opportunity would never come, even
if they waited until the crack o’ doom.

Then, again, we had the type of man who really never
knew all the facts about his own affairs. Many
of the brightest kept their books in such a way that
they did not actually know when they were making money
on a certain operation and when they were losing.
This unintelligent competition was a hard matter to
contend with. Good old-fashioned common sense
has always been a mighty rare commodity. When
a man’s affairs are not going well, he hates
to study the books and face the truth. From the
first, the men who managed the Standard Oil Company
kept their books intelligently as well as correctly.
We knew how much we made and where we gained or lost.
At least, we tried not to deceive ourselves.

My ideas of business are no doubt old-fashioned, but
the fundamental principles do not change from generation
to generation, and sometimes I think that our quick-witted
American business men, whose spirit and energy are
so splendid, do not always sufficiently study the real
underlying foundations of business management.
I have spoken of the necessity of being frank and
honest with oneself about one’s own affairs:
many people assume that they can get away from the
truth by avoiding thinking about it, but the natural
law is inevitable, and the sooner it is recognized,
the better.

One hears a great deal about wages and why they must
be maintained at a high level, by the railroads, for
example. A labourer is worthy of his hire, no
less, but no more, and in the long run he must contribute
an equivalent for what he is paid. If he does
not do this, he is probably pauperized, and you at
once throw out the balance of things. You can’t
hold up conditions artificially, and you can’t
change the underlying laws of trade. If you try,
you must inevitably fail. All this may be trite
and obvious, but it is remarkable how many men overlook
what should be the obvious. These are facts we
can’t get away from—­a business man
must adapt himself to the natural conditions as they
exist from month to month and year to year. Sometimes
I feel that we Americans think we can find a short
road to success, and it may appear that often this
feat is accomplished; but real efficiency in work
comes from knowing your facts and building upon that
sure foundation.

Page 27

Many men of wealth do not retire from business even
when they can. They are not willing to be idle,
or they have a just pride in their work and want to
perfect the plans in which they have faith, or, what
is of still more consequence, they may feel the call
to expand and build up for the benefit of their employees
and associates, and these men are the great builders
up in our country. Consider for a moment how
much would have been left undone if our prosperous
American business men had sat down with folded hands
when they had acquired a competency. I have respect
for all these reasons, but if a man has succeeded,
he has brought upon himself corresponding responsibilities,
and our institutions devoted to helping men to help
themselves need the brain of the American business
man as well as part of his money.

Some of these men, however, are so absorbed in their
business affairs that they hardly have time to think
of anything else. If they do interest themselves
in a work outside of their own office and undertake
to raise money, they begin with an apology, as if they
are ashamed of themselves.

“I am no beggar,” I have heard many of
them say, to which I could only reply: “I
am sorry you feel that way about it.”

I have been this sort of beggar all my life and the
experiences I have had were so interesting and important
to me that I will venture to speak of them in a later
chapter.

CHAPTER IV

SOME EXPERIENCES IN THE OIL BUSINESS

During the years when I was just coming to man’s
estate, the produce business of Clark & Rockefeller
went on prosperously, and in the early sixties we
organized a firm to refine and deal in oil. It
was composed of Messrs. James and Richard Clark, Mr.
Samuel Andrews, and the firm of Clark & Rockefeller,
who were the company. It was my first direct
connection with the oil trade. As the new concern
grew the firm of Clark & Rockefeller was called upon
to supply a large special capital. Mr. Samuel
Andrews was the manufacturing man of the concern, and
he had learned the process of cleansing the crude
oil by the use of sulphuric acid.

In 1865 the partnership was dissolved; it was decided
that the cash assets should be collected and the debts
paid, but this left the plant and the good-will to
be disposed of. It was suggested that they should
go to the highest bidder among ourselves. This
seemed a just settlement to me, and the question came
up as to when the sale should be held and who would
conduct it. My partners had a lawyer in the room
to represent them, though I had not considered having
a legal representative; I thought I could take care
of so simple a transaction. The lawyer acted
as the auctioneer, and it was suggested that we should
go on with the sale then and there. All agreed,
and so the auction began.

Page 28

I had made up my mind that I wanted to go into the
oil trade, not as a special partner, but actively
on a larger scale, and with Mr. Andrews wished to
buy that business. I thought that I saw great
opportunities in refining oil, and did not realize
at that time that the whole oil industry would soon
be swamped by so many men rushing into it. But
I was full of hope, and I had already arranged to
get financial accommodation to an amount that I supposed
would easily pay for the plant and good-will.
I was willing to give up the other firm of Clark &
Rockefeller, and readily settled that later—­my
old partner, Mr. Clark, taking over the business.

The bidding began, I think, at $500 premium.
I bid a thousand; they bid two thousand; and so on,
little by little, the price went up. Neither
side was willing to stop bidding, and the amount gradually
rose until it reached $50,000, which was much more
than we supposed the concern to be worth. Finally,
it advanced to $60,000, and by slow stages to $70,000,
and I almost feared for my ability to buy the business
and have the money to pay for it. At last the
other side bid $72,000. Without hesitation I
said $72,500. Mr. Clark then said:

The firm of Rockefeller & Andrews was then established,
and this was really my start in the oil trade.
It was my most important business for about forty
years until, at the age of about fifty-six, I retired.

The story of the early history of the oil trade is
too well known to bear repeating in detail. The
cleansing of crude petroleum was a simple and easy
process, and at first the profits were very large.
Naturally, all sorts of people went into it: the
butcher, the baker, and the candlestick-maker began
to refine oil, and it was only a short time before
more of the finished product was put on the market
than could possibly be consumed. The price went
down and down until the trade was threatened with
ruin. It seemed absolutely necessary to extend
the market for oil by exporting to foreign countries,
which required a long and most difficult development;
and also to greatly improve the processes of refining
so that oil could be made and sold cheaply, yet with
a profit, and to use as by-products all of the materials
which in the less-efficient plants were lost or thrown
away.

These were the problems which confronted us almost
at the outset, and this great depression led to consultations
with our neighbors and friends in the business in
the effort to bring some order out of what was rapidly
becoming a state of chaos. To accomplish all these
tasks of enlarging the market and improving the methods
of manufacture in a large way was beyond the power
or ability of any concern as then constituted.
It could only be done, we reasoned, by increasing our
capital and availing ourselves of the best talent and
experience.

Page 29

It was with this idea that we proceeded to buy the
largest and best refining concerns and centralize
the administration of them with a view to securing
greater economy and efficiency. The business grew
faster than we had anticipated.

This enterprise, conducted by men of application and
ability working hard together, soon built up unusual
facilities in manufacture, in transportation, in finance,
and in extending markets. We had our troubles
and set-backs; we suffered from some severe fires;
and the supply of crude oil was most uncertain.
Our plans were constantly changed by changed conditions.
We developed great facilities in an oil centre, erected
storage tanks, and connected pipe-lines; then the oil
failed and our work was thrown away. At best it
was a speculative trade, and I wonder that we managed
to pull through so often; but we were gradually learning
how to conduct a most difficult business.

FOREIGN MARKETS

Several years ago, when asked how our business grew
to such large proportions I explained that our first
organization was a partnership and afterward a corporation
in Ohio. That was sufficient for a local refining
business. But, had we been dependent solely upon
local business, we should have failed long since.
We were forced to extend our markets into every part
of the world. This made the sea-board cities
a necessary place of business, and we soon discovered
that manufacturing for export could be more economically
carried on there; hence refineries were established
at Brooklyn, at Bayonne, at Philadelphia, at Baltimore,
and necessary corporations were organized in the different
states.

We soon discovered, as the business grew, that the
primary method of transporting oil in barrels could
not last. The package often cost more than the
contents, and the forests of the country were not
sufficient to supply cheaply the necessary material
for an extended time. Hence we devoted attention
to other methods of transportation, adopted the pipe-line
system, and found capital for pipe-line construction
equal to the necessities of the business.

To operate pipe-lines required franchises from the
states in which they were located—­and consequently
corporations in those states—­just as railroads
running through different states are forced to operate
under separate state charters. To perfect the
pipe-line system of transportation required many millions
of capital. The entire oil business is dependent
upon the pipe-line. Without it every well would
be less valuable and every market at home and abroad
would be more difficult to serve or retain, because
of the additional cost to the consumer. The expansion
of the whole industry would have been retarded without
this method of transportation.

Then the pipe-line system required other improvements,
such as tank-cars upon railroads, and finally the
tank-steamer. Capital had to be furnished for
them and corporations created to own and operate them.

Page 30

Everyone of the steps taken was necessary if the business
was to be properly developed, and only through such
successive steps and by a great aggregation of capital
is America to-day enabled to utilize the bounty which
its land pours forth, and to furnish the world with
light.

THE START OF THE STANDARD OIL COMPANY

In the year 1867 the firms of William Rockefeller
& Co., Rockefeller & Andrews, Rockefeller & Co., and
S.V. Harkness and H.M. Flagler united in
forming the firm of Rockefeller, Andrews & Flagler.

The cause leading to the formation of this firm was
the desire to unite our skill and capital in order
to carry on a business of greater magnitude with economy
and efficiency in place of the smaller business that
each had heretofore conducted separately. As time
went on and the possibilities became apparent, we
found further capital to be necessary; then we interested
others and organized the Standard Oil Company, with
a capital of $1,000,000. Later we saw that more
money could be utilized, found persons who were willing
to invest with us, and increased our capital to $2,500,000,
in 1872, and afterward in 1874 to $3,500,000.
As the business grew, and markets were obtained at
home and abroad, more persons and capital were added
to the business, and new corporate agencies were obtained
or organized, the object being always the same—­to
extend our operations by furnishing the best and cheapest
products.

I ascribe the success of the Standard Oil Company
to its consistent policy of making the volume of its
business large through the merit and cheapness of
its products. It has spared no expense in utilizing
the best and most efficient method of manufacture.
It has sought for the best superintendents and workmen
and paid the best wages. It has not hesitated
to sacrifice old machinery and old plants for new and
better ones. It has placed its manufactories at
the points where they could supply markets at the
least expense. It has not only sought markets
for its principal products, but for all possible by-products,
sparing no expense in introducing them to the public
in every nook and corner of the world. It has
not hesitated to invest millions of dollars in methods
for cheapening the gathering and distribution of oils
by pipe-lines, special cars, tank-steamers, and tank-wagons.
It has erected tank-stations at railroad centres in
every part of the country to cheapen the storage and
delivery of oil. It has had faith in American
oil and has brought together vast sums of money for
the purpose of making it what it is, and for holding
its market against the competition of Russia and all
the countries which are producers of oil and competitors
against American products.

THE INSURANCE PLANS

Page 31

Here is an example of one of the ways in which we
achieved certain economies and gained real advantage.
Fires are always to be reckoned with in oil refining
and storage, as we learned by dear experience, but
in having our plants distributed all over the country
the unit of risk and possible loss was minimized.
No one fire could ruin us, and we were able thus to
establish a system of insuring ourselves. Our
reserve fund which provided for this insurance could
not be wiped out all at once, as might be the case
with a concern having its plants together or near
each other. Then we studied and perfected our
organization to prevent fires, improving our appliances
and plans year after year until the profit on this
insurance feature became a very considerable item
in the Standard earnings.

It can easily be seen that this saving in insurance,
and minimizing the loss by fire affected the profits,
not only in refining, but touched many other associated
enterprises: the manufacture of by-products,
the tanks and steamers, the pumping-stations, etc.

We devoted ourselves exclusively to the oil business
and its products. The company never went into
outside ventures, but kept to the enormous task of
perfecting its own organization. We educated our
own men; we trained many of them from boyhood; we
strove to keep them loyal by providing them full scope
for their ability; they were given opportunities to
buy stock, and the company itself helped them to finance
their purchases. Not only here in America, but
all over the world, our young men were given chances
to advance themselves, and the sons of the old partners
were welcomed to the councils and responsibilities
of the administration. I may say that the company
has been in all its history, and I am sure it is at
present, a most happy association of busy people.

I have been asked if my advice is not often sought
by the present managers. I can say that if it
were sought it would be gladly given. But the
fact is that since I retired it has been very little
required. I am still a large stockholder, indeed
I have increased my holdings in the company’s
stock since I relinquished any part in its management.

WHY THE STANDARD PAYS LARGE DIVIDENDS

Let me explain what many people, perhaps, fully appreciate,
but some, I am sure, do not. The Standard pays
four dividends a year: the first in March, which
is the result of the busiest season of the whole twelvemonth,
because more oil is consumed in winter than at other
seasons, and three other dividends later, at about
evenly divided periods. Now, these dividends
run up to 40 per cent. on the capital stock of $100,000,000,
but that does not mean that the profit is 40 per cent.
on the capital invested. As a matter of fact,
it represents the results of the savings and surplus
gained through all the thirty-five or forty years
of the workings of the companies. The capital
stock could be raised several hundred per cent. without
a penny of over-capitalization or “water”;
the actual value is there. If this increase had
been made, the rate would represent a moderate dividend-paying
power of about 6 to 8 per cent.

Page 32

A NORMAL GROWTH

Study for a moment the result of what has been a natural
and absolutely normal increase in the value of the
company’s possessions. Many of the pipe-lines
were constructed during a period when costs were about
50 per cent. of what they are now. Great fields
of oil lands were purchased as virgin soil, which
later yielded an immense output. Quantities of
low-grade crude oil which had been bought by the company
when it was believed to be of little value, but which
the company hoped eventually to utilize, were greatly
increased in value by inventions for refining it and
for using the residues formerly considered almost
worthless. Dock property was secured at low prices
and made valuable by buildings and development.
Large unimproved tracts of land near the important
business centres were acquired. We brought our
industries to these places, made the land useful, and
increased the value, not only of our own property,
but of the land adjacent to it to many times the original
worth. Wherever we have established businesses
in this and other countries we have bought largely
of property. I remember a case where we paid only
$1,000 or so an acre for some rough land to be used
for such purposes, and, through the improvements we
created, the value has gone up 40 or 50 times as much
in 35 or 40 years.

Others have had similar increases in the value of
their properties, but have enlarged their capitalization
correspondingly. They have escaped the criticism
which has been directed against us, who with our old-fashioned
and conservative notions have continued without such
expansion of capitalization.

There is nothing strange or miraculous in all this;
it was all done through this natural law of trade
development. It is what the Astors and many other
large landholders did.

If a man starts in business with $1,000 capital and
gradually increases his property and investment by
retaining in his concern much of his earnings, instead
of spending them, and thus accumulates values until
his investment is, say, $10,000, it would be folly
to base the percentage of his actual profits only
on the original $1,000 with which he started.
Here, again, I think the managers of the Standard
should be praised, and not blamed. They have set
an example for upbuilding on the most conservative
lines, and in a business which has always been, to
say the least, hazardous, and to a large degree unavoidably
speculative. Yet no one who has relied upon the
ownership of this stock to pay a yearly income has
been disappointed, and the stock is held by an increasing
number of small holders the country over.

THE MANAGEMENT OF CAPITAL

Page 33

We never attempted, as I have already said, to sell
the Standard Oil stock on the market through the Stock
Exchange. In the early days the risks of the
business were great, and if the stock had been dealt
in on the Exchange its fluctuations would no doubt
have been violent. We preferred to have the attention
of the owners and administrators of the business directed
wholly to the legitimate development of the enterprise
rather than to speculation in its shares. The
interests of the company have been carefully conserved.
We have been criticized for paying large dividends
on a capitalization which represents but a small part
of the actual property owned by the company. If
we had increased the capitalization to bring it up
to the real value, and listed the shares on the Exchange,
we might have been criticized then for promoting a
project to induce the public to invest. As I have
indicated, the foundations of the company were so thoroughly
established, and its affairs so conservatively managed,
that, after the earlier period of struggle to secure
adequate capital and in view of the trying experiences
through which we then passed, we decided to pursue
the policy of relying upon our own resources.
Since then we have never been obliged to lean very
heavily upon the financial public, but have sought
rather to hold ourselves in position not only to protect
our own large and important interests, but to be prepared
in times of stress to lend a helping hand to others.
The company has suffered from the statements of people
who, I am convinced, are not familiar with all the
facts. As I long ago ceased to have any active
part in the management of its affairs perhaps I may
venture the opinion that men who devote themselves
to building up the sale of American products all over
the world, in competition with foreign manufacturers
should be appreciated and encouraged.

There have been so many tales told about the so-called
speculations of the Standard Oil Company that I may
say a word about that subject. This company is
interested only in oil products and such manufacturing
affairs as are legitimately connected therewith.
It has plants for the making of barrels and tanks;
and building pumps for pumping oil; it owns vessels
for carrying oil, tank-cars, pipes for transporting
oil, etc., etc.—­but it is not
concerned in speculative interests. The oil business
itself is speculative enough, and its successful administration
requires a firm hand and a cool head.

The company pays dividends to its stockholders which
it earns in carrying on this oil trade. This
money the stockholders can and do use as they think
fit, but the company is in no way responsible for the
disposition that the stockholders make of their dividends.
The Standard Oil Company does not own or control “a
chain of banks,” nor has it any interest directly
or indirectly in any bank. Its relations are
confined to the functions of ordinary banking, such
as other depositors have. It buys and sells its
own exchange; and these dealings, extending over many
years, have made its bills of exchange acceptable
all over the world.

Page 34

CHARACTER THE ESSENTIAL THING

In speaking of the real beginning of the Standard
Oil Company, it should be remembered that it was not
so much the consolidation of the firms in which we
had a personal interest, but the coming together of
the men who had the combined brain power to do the
work, which was the actual starting-point. Perhaps
it is worth while to emphasize again the fact that
it is not merely capital and “plants” and
the strictly material things which make up a business,
but the character of the men behind these things,
their personalities, and their abilities; these are
the essentials to be reckoned with.

Late in 1871, we began the purchase of some of the
more important of the refinery interests of Cleveland.
The conditions were so chaotic and uncertain that
most of the refiners were very desirous to get out
of the business. We invariably offered those who
wanted to sell the option of taking cash or stock
in the company. We very much preferred to have
them take the stock, because a dollar in those days
looked as large as a cart-wheel, but as a matter of
business policy we found it desirable to offer them
the option, and in most cases they were even precipitate
in their choice of the cash. They knew what a
dollar would buy, but they were very sceptical in
regard to the possibilities of resurrecting the oil
business and giving any permanent value to these shares.

These purchases continued over a period of years,
during which many of the more important refineries
at Cleveland were bought by the Standard Oil Company.
Some of the smaller concerns, however, continued in
the business for many years, although they had the
same opportunity as others to sell. There were
always, at other refining points which were regarded
as more favourably located than Cleveland, many refineries
in successful operation.

THE BACKUS PURCHASE

All these purchases of refineries were conducted with
the utmost fairness and good faith on our part, yet
in many quarters the stories of certain of these transactions
have been told in such form as to give the impression
that the sales were made most unwillingly and only
because the sellers were forced to make them by the
most ruthless exertion of superior power. There
was one transaction, viz., the purchase of the
property of the Backus Oil Company, which has been
variously exploited, and I am made to appear as having
personally robbed a defenceless widow of an extremely
valuable property, paying her therefor only a mere
fraction of its worth. The story as told is one
which makes the strongest appeal to the sympathy and,
if it were true, would represent a shocking instance
of cruelty in crushing a defenceless woman. It
is probable that its wide circulation and its acceptance
as true by those who know nothing of the facts has
awakened more hostility against the Standard Oil Company
and against me personally than any charge which has
been made.

Page 35

This is my reason for entering so much into detail
in this particular case, which I am exceedingly reluctant
to do, and for many years have refrained from doing.

Mr. F.M. Backus, a highly respected citizen of
Cleveland and an old and personal friend of mine,
had for several years prior to his death in 1874 been
engaged in the lubricating oil business which was carried
on after his death as a corporation known as the Backus
Oil Company. In the latter part of 1878, our
company purchased certain portions of the property
of this company. The negotiations which led to
this purchase extended over several weeks, being conducted
on behalf of Mrs. Backus, as the principal stockholder,
by Mr. Charles H. Marr, and on behalf of our company
by Mr. Peter S. Jennings. I personally had nothing
to do with the negotiations except that, when the matter
first came up, Mrs. Backus requested me to call at
her house, which I did, when she spoke of selling
the property to our company and requested me to personally
conduct the negotiations with her with reference to
it. This I was obliged to decline to do, because,
as I then explained to her, I was not familiar with
the details of the business. In that conversation
I advised her not to take any hasty action, and when
she expressed fears about the future of the business,
stating, for example, that she could not get cars
to transport sufficient oil, I said to her that, though
we were using our cars and required them in our business,
yet we would loan her any number she needed, and do
anything else in reason to assist her, and I did not
see why she could not successfully prosecute her business
in the future as in the past. I told her, however,
that if after reflection she desired to pursue negotiations
for the sale of her property some of our people, familiar
with the lubricating oil business, would take up the
question with her. As she still expressed a desire
to have our company buy her property, negotiations
were taken up by Mr. Jennings, and the only other
thing that I had to do with the matter was that when
our experts reported that in their judgment the value
of the works, good will, and successorship which we
had decided to buy were worth a certain sum, I asked
them to add $10,000, in order to make doubly sure that
she received full value. The sale was consummated,
as we supposed, to the entire satisfaction of Mrs.
Backus, and the purchase price which had been agreed
upon was paid.

To my profound astonishment, a day or two after the
transaction had been closed, I received from her a
very unkind letter complaining that she had been unjustly
treated. After investigating the matter I wrote
her the following letter:

November 13, 1878.

Dearmadam:

Page 36

I have held your note of the 11th inst.,
received yesterday, until to-day, as I wished
to thoroughly review every point connected with the
negotiations for the purchase of the stock of the Backus
Oil Company, to satisfy myself as to whether
I had unwittingly done anything whereby you could
have any right to feel injured. It is true
that in the interview I had with you I suggested that
if you desired to do so, you could retain an
interest in the business of the Backus Oil Company,
by keeping some number of its shares, and then
I understood you to say that if you sold out you wished
to go entirely out of the business. That
being my understanding, our arrangements were
made in case you concluded to make the sale that precluded
any other interests being represented, and therefore,
when you did make the inquiry as to your taking
some of the stock, our answer was given in accordance
with the facts noted above, but not at all in
the spirit in which you refer to the refusal in your
note. In regard to the reference that you
make as to my permitting the business of the
Backus Oil Company to be taken from you, I
say that in this as in all else you have written
in your letter of the 11th inst., you do me most
grievous wrong. It was but of little moment
to the interests represented by me whether the business
of the Backus Oil Company was purchased or not.
I believe that it was for your interest to make
the sale, and am entirely candid in this statement,
and beg to call your attention to the time, some two
years ago, when you consulted Mr. Flagler and
myself as to selling out your interests to Mr.
Rose, at which time you were desirous of selling
at considerably less price, and upon time, than
you have now received in cash, and which sale
you would have been glad to have closed if you
could have obtained satisfactory security for the
deferred payments. As to the price paid for the
property, it is certainly three times greater
than the cost at which we could now construct
equal or better facilities; but wishing to take a liberal
view of it, I urged the proposal of paying $60,000,
which was thought much too high by some of our
parties. I believe that if you would reconsider
what you have written in your letter, to which this
is a reply, you must admit having done me great injustice,
and I am satisfied to await upon your innate
sense of right for such admission. However,
in view of what seems to be your present feeling,
I now offer to restore to you the purchase made by
us, you simply returning the amount of money
which we have invested, and leaving us as though
no purchase has been made.

Should you not desire to accept this
proposal, I offer to you 100, 200 or 300 shares
of the stock at the same price that we paid for the
same, with this addition, that if we keep the property
we are under engagement to pay into the treasury
of the Backus Oil Company any amount which added
to the amount already paid would make a total
of $100,000 and thereby make the shares $100 each.

That you may not be
compelled to hastily come to a conclusion, I
will leave open for
three days these propositions for your
acceptance or declination,
and in the meantime believe me,

Page 37

Yours very truly,

John D. Rockefeller.

Neither of these offers was accepted. In order
that this may not rest on my unsupported assertion,
I submit the following documents: The first is
a letter from Mr. H.M. Backus, a brother of Mrs.
Backus’s deceased husband, who had been associated
with the business and had remained with the company
after his death. The letter was written without
any solicitation whatever on my part, but I have since
received permission from Mr. Backus to print it.
It is followed by extracts from affidavits made by
the gentleman who conducted the negotiations on behalf
of Mrs. Backus. I have no wish to reprint the
complimentary allusion to myself in Mr. Backus’s
letter, but have feared to omit a word of it lest
some misunderstanding ensue:

BowlingGreen,
Ohio, September 18, ’03.

Mr. John D.
Rockefeller,
Cleveland, Ohio.

I do not know whether you will ever
receive this letter or not, whether your secretary
will throw it into the waste-basket or not, but
I will do my part and get it off my mind, and it will
not be my fault if you do not receive or read
it. Ever since the day that my deceased
brother’s wife, Mrs. F.N. Backus, wrote
you the unjust and unreasonable letter in reference
to the sale of the property of the old Backus
Oil Company, in which I had a small interest, I have
wanted to write you and record my disapproval
of that letter. I lived with my brother’s
family, was at the house the day you called to
talk the matter of the then proposed purchase of the
property with Mrs. Backus by her request, as
she told Mr. Jennings that she wanted to deal
through you. I was in favour of the sale from
the first.

I was with Mrs. Backus all through
the trouble with Mr. Rose and with Mr. Maloney,
did what I could to encourage her, and to prevent
Mr. Rose from getting the best of her. Mrs.
Backus, in my opinion, is an exceptionally good
financier, but she does not know and no one can
convince her that the best thing that ever happened
to her financially was the sale of her interest
in the Backus Oil Company to your people.
She does not know that five more years of the then
increasing desperate competition would have bankrupted
the company, and that with the big debt that
she was carrying on the lot on Euclid Avenue,
near Sheriff Street, she would have been swamped,
and that the only thing that ever saved her and
the oil business generally was the plan of John
D. Rockefeller. She thinks that you literally
robbed her of millions, and feeds her children on that
diet three times a day more or less, principally
more, until it has become a mania with her, and
no argument that any one else can suggest will
have any effect upon her. She is wise and good
in many ways, but on that one subject she is
one-sided, I think. Of course, if we could
have been assured of continued dividends, I would have

Page 38

been opposed to selling the business, but that
was out of the question. I know of the ten
thousand dollars that was added to the purchase
price of the property at your request, and I know that
you paid three times the value of the property,
and I know that all that ever saved our company
from ruin was the sale of its property to you,
and I simply want to ease my mind by doing justice
to you by saying so. After the sale to your
company I was simple enough to go to Buffalo
and try it again, but soon met with defeat and retired
with my flag in the dust. I then went to Duluth,
and was on the top wave, till the real-estate
bubble broke, and I broke with it. I have
had my ups and downs, but I have tried to take my
medicine and look pleasant instead of sitting
down under a juniper tree and blaming my losses
to John D. Rockefeller.

I suppose I would have put off writing
this letter for another year or more as I have
done so long, had it not been for a little chat that
I had with Mr. Hanafin, Superintendent of the Buckeye
Pipe Line Company, a day or two since when I
was relating the sale, etc., of the old
B.O. Co.’s business, and in that way revived
the intention that had lain dormant since the
last good resolution in regard to writing it
was made. But it’s done now, and off my
mind.

With much respect and
admiration to John D. Rockefeller I remain,

Yours truly,

H.M. Backus.

It appears from the affidavits that the negotiations
were conducted on behalf of Mrs. Backus and her company
by Charles H. Marr, who had been in the employ of
the Backus Company for some time, and by Mr. Maloney,
who was the superintendent of the company from the
time of its organization and was also a stockholder;
and on behalf of the Standard Oil Company by Mr. Peter
S. Jennings.

There has been an impression that the Standard Oil
Company purchased for $79,000 property which was reasonably
worth much more, and that this sacrifice was occasioned
by threats and compulsion. Mr. Jennings requested
Mr. Marr to submit a written proposition giving the
price put by the Backus Company upon the several items
of property and assets which it desired to sell.
This statement was furnished and was annexed to Mr.
Jennings’s affidavit. The Standard Oil Company
finally decided not to purchase all of the assets
of the company, but only the oil on hand, for which
it paid the full market price, amounting to about
$19,000, and the item “works, good-will, and
successorship,” which were offered by Mr. Marr
at $71,000, and for which the Standard offered $60,000,
which was promptly accepted. Mr. Marr made affidavit
as follows:

Page 39

“Charles H. Marr, being duly
sworn, says that, in behalf of the Backus Oil
Company, he conducted the negotiations which led to
the sale of its works, good-will, and stock of
oils and during same when said company had offered
to sell its entire stock for a gross sum, to
wit, the sum of one hundred and fifty thousand dollars
($150,000), which was to include cash on hand,
accrued dividends, accounts, etc., said
Jennings requested said company to submit an itemized
proposition fixing values upon different articles proposed
to be sold, and that he, after full consideration
with Mrs. Backus and with her knowledge and consent,
submitted the written proposition attached to
said Jennings’s affidavit; that the same is
in his handwriting, and was copied at the office
of the American Lubricating Oil Company from
the original by himself at the request of said
Jennings, and said original was submitted by affiant
to Mrs. Backus.

“That she was fully cognizant
of all the details of said negotiations and the
items and values attached thereto in said proposition,
consulted with at every step thereof, none of which
were taken without her advice, as she was by far
the largest stockholder in said Backus Oil Company,
owning about seven-tenths (7/10) of said company’s
stock, and she fully approved of said proposition,
and accepted the offer of said Jennings to pay sixty
thousand dollars ($60,000) for the item works,
good-will, and successorship without any opposition,
so far as affiant knows. And affiant says
that the amount realized from the assets of the Backus
Oil Company, including purchase price, has been
about one hundred and thirty-three thousand dollars
($133,000), and a part of its assets have not
yet been converted into money as affiant is informed.”

Mr. Marr, who was, it will be remembered, the widow’s
representative, refers to the negotiations leading
up to the purchase and says:

“But affiant says that nothing
that was said by Mr. Jennings or anybody else
during their progress could be construed into a threat,
nor did anything that was said or done by said Jennings
hasten or push forward said trade.”

He also says:

“Affiant says that the negotiations
extended over a period of from two to three weeks
... and during their pendency that Mrs. Backus frequently
urged affiant to bring the same to a conclusion as
she was anxious to dispose of said business and
relieve herself from further care and responsibility
therewith. And when the said offer of purchase
by said Jennings upon the terms aforesaid was conveyed
to her by affiant, she expressed herself as entirely
satisfied therewith.”

Mr. Maloney made an affidavit that he was superintendent
of the Backus Oil Company from the time of its organization,
and also a stockholder in the company, and had been
associated in business with Mr. Backus for many years
previous to his death; that he took part in the negotiations
for the sale, representing Mrs. Backus in the matter.
After speaking of the negotiations, he says:

Page 40

“Finally, after consultation,
the proposition was made by her to dispose of
the works, good-will, and successorship for $71,000.
A few days after the proposal was made to her
to pay the sum of $60,000 for works and good-will,
and to take the oil on hand at its market price,
which proposition she accepted, and the sale was concluded.

“During these negotiations Mrs.
Backus was anxious to sell, and was entirely
satisfied with the sale after it was concluded.
I know of the fact that about a year and a half
previous she had offered to sell out the stock
of the Backus Oil Company at from 30 to 33 per cent.
less than she received in the sale referred to, and
the value of the works and property sold had
not increased in the meantime. I was well
acquainted with the works of the Backus Oil Company
and their value. I could at the time of
the sale have built the works new for $25,000.
There were no threats nor intimidations, nor anything
of the kind used to force the sale. The negotiations
were pleasant and fair, and the price paid in
excess of the value, and satisfactory to Mrs.
Backus and all concerned for her.”

So far as I can see, after more than 30 years have
elapsed, there was nothing but the most kindly and
considerate treatment of Mrs. Backus on the part of
the Standard Oil Company. I regret that Mrs. Backus
did not take at least part of her pay in Standard
certificates, as we suggested she should do.

THE QUESTION OF REBATES

Of all the subjects which seem to have attracted the
attention of the public to the affairs of the Standard
Oil Company, the matter of rebates from railroads
has perhaps been uppermost. The Standard Oil
Company of Ohio, of which I was president, did receive
rebates from the railroads prior to 1880, but received
no advantages for which it did not give full compensation.
The reason for rebates was that such was the railroads’
method of business. A public rate was made and
collected by the railroad companies, but, so far as
my knowledge extends, was seldom retained in full;
a portion of it was repaid to the shippers as a rebate.
By this method the real rate of freight which any
shipper paid was not known by his competitors nor by
other railroad companies, the amount being a matter
of bargain with the carrying company. Each shipper
made the best bargain that he could, but whether he
was doing better than his competitor was only a matter
of conjecture. Much depended upon whether the
shipper had the advantage of competition of carriers.

Page 41

The Standard Oil Company of Ohio, being situated at
Cleveland, had the advantage of different carrying
lines, as well as of water transportation in the summer;
taking advantage of those facilities, it made the
best bargains possible for its freights. Other
companies sought to do the same. The Standard
gave advantages to the railroads for the purpose of
reducing the cost of transportation of freight.
It offered freights in large quantity, car-loads and
train-loads. It furnished loading facilities
and discharging facilities at great cost. It
provided regular traffic, so that a railroad could
conduct its transportation to the best advantage and
use its equipment to the full extent of its hauling
capacity without waiting for the refiner’s convenience.
It exempted railroads from liability for fire and carried
its own insurance. It provided at its own expense
terminal facilities which permitted economies in handling.
For these services it obtained contracts for special
allowances on freights.

But notwithstanding these special allowances, this
traffic from the Standard Oil Company was far more
profitable to the railroad companies than the smaller
and irregular traffic, which might have paid a higher
rate.

To understand the situation which affected the giving
and taking of rebates it must be remembered that the
railroads were all eager to enlarge their freight
traffic. They were competing with the facilities
and rates offered by the boats on lake and canal and
by the pipe-lines. All these means of transporting
oil cut into the business of the railroads, and they
were desperately anxious to successfully meet this
competition. As I have stated we provided means
for loading and unloading cars expeditiously, agreed
to furnish a regular fixed number of car-loads to
transport each day, and arranged with them for all
the other things that I have mentioned, the final result
being to reduce the cost of transportation for both
the railroads and ourselves. All this was following
in the natural laws of trade.

PIPE-LINES VS. RAILROADS

The building of the pipe-lines introduced another
formidable competitor to the railroads, but as oil
could be transported by pumping through pipes at a
much less cost than by hauling in tank-cars in a railroad
train the development of the pipe-line was inevitable.
The question was simply whether the oil traffic was
sufficient in volume to make the investment profitable.
When pipe-lines had been built to oil fields where
the wells had ceased to yield, as often happened,
they were about the most useless property imaginable.

Page 42

An interesting feature developed through the relations
which grew up between the railroads and the pipe-lines.
In many cases it was necessary to combine the facilities
of both, because the pipes reached only part of the
way, and from the place where they ended the railroad
carried the oil to its final destination. In some
instances a railroad had formerly carried the oil
the entire distance upon an agreed rate, but now that
this oil was partly pumped by pipe-lines and partly
carried by rail, the freight payment was divided between
the two. But, as a through rate had been provided,
the owners of the pipe-line agreed to remit a part
of its charges to the railroad, so we had cases where
the Standard paid a rebate to the railroad instead
of the reverse—­but I do not remember having
heard any complaint of this coming from the students
of these complicated subjects.

The profits of the Standard Oil Company did not come
from advantages given by railroads. The railroads,
rather, were the ones who profited by the traffic
of the Standard Oil Company, and whatever advantage
it received in its constant efforts to reduce rates
of freight was only one of the many elements of lessening
cost to the consumer which enabled us to increase
our volume of business the world over because we could
reduce the selling price.

How general was the complicated bargaining for rates
can hardly be imagined; everyone got the best rate
that he could. After the passage of the Interstate
Commerce Act, it was learned that many small companies
which shipped limited quantities had received lower
rates than we had been able to secure, notwithstanding
the fact that we had made large investments to provide
for terminal facilities, regular shipments, and other
economies. I well remember a bright man from
Boston who had much to say about rebates and drawbacks.
He was an old and experienced merchant, and looked
after his affairs with a cautious and watchful eye.
He feared that some of his competitors were doing
better than he in bargaining for rates, and he delivered
himself of this conviction:

“I am opposed on principle to the whole system
of rebates and drawbacks—­unless I am in
it.”

CHAPTER V

OTHER BUSINESS EXPERIENCES AND BUSINESS PRINCIPLES

Going into the iron-ore fields was one of those experiences
in which one finds oneself rather against the will,
for it was not a deliberate plan of mine to extend
my cares and responsibilities. My connection
with iron ores came about through some unfortunate
investments in the Northwest country.

These interests had included a good many different
industries, mines, steel mills, paper mills, a nail
factory, railroads, lumber fields, smelting properties,
and other investments about which I have now forgotten.
I was a minority stockholder in all these enterprises,
and had no part in their management. Not all
of them were profitable. As a matter of fact,
for a period of years just preceding the panic of
1893, values were more or less inflated, and many people
who thought they were wealthy found that the actual
facts were quite different from what they had imagined
when the hard experiences of that panic forced upon
them the unpalatable truth.

Page 43

Most of these properties I had not even seen, having
relied upon the investigation of others respecting
their worth; indeed, it has never been my custom to
rely alone upon my own knowledge of the value of such
plants. I have found other people who knew much
better than I how to investigate such enterprises.

Even at this time I had been planning to relieve myself
of business cares, and the panic only caused me to
postpone taking the long holiday to which I had been
looking forward. I was fortunate in making the
acquaintance of Mr. Frederick T. Gates, who was then
engaged in some work in connection with the American
Baptist Education Society, which required him to travel
extensively over the country, north, south, east,
and west.

It occurred to me that Mr. Gates, who had a great
store of common sense, though no especial technical
information about factories and mills, might aid me
in securing some first-hand information as to how
these concerns were actually prospering. Once,
as he was going South, I suggested that he look over
an iron mill in which I had some interest which happened
to be on his route.

His report was a model of what such a report should
be. It stated the facts, and in this case they
were almost all unfavourable. A little later
he happened to be going West, and I gave him the name
and address of property in that region in which I
held a minority interest. I felt quite sure that
this particular property was doing well, and it was
somewhat of a shock to me to learn through his clear
and definite account that it was only a question of
time before this enterprise, too, which had been represented
as rolling in money, would get into trouble if things
kept on as they were going.

NURSING THE COMMERCIALLY ILL

I then arranged with Mr. Gates to accept a position
whereby he could help me unravel these tangled affairs,
and become, like myself, a man of business, but it
was agreed between us that he should not abandon his
larger and more important plans for working out some
philanthropic aspirations that he had.

Right here I may stop to give credit to Mr. Gates
for possessing a combination of rare business ability,
very highly developed and very honourably exercised,
overshadowed by a passion to accomplish some great
and far-reaching benefits to mankind, the influence
of which will last. He is the chairman of the
General Education Board and active in many other boards,
and for years he has helped in the various plans that
we have been interested in where money was given in
the hope that it would do something more than temporary
service.

Page 44

Mr. Gates has for many years been closely associated
with my personal affairs. He has been through
strenuous times with me, and has taken cares of many
kinds off my shoulders, leaving me more time to play
golf, plan roads, move trees, and follow other congenial
occupations. His efforts in the investigations
in connection with our educational contributions,
our medical research, and other kindred works have
been very successful. During the last ten or
twelve years my son has shared with Mr. Gates the
responsibility of this work, and more recently Mr.
Starr J. Murphy has also joined with us to help Mr.
Gates, who has borne the heat and burden of the day,
and has well earned some leisure which we have wanted
him to enjoy.

But to return to the story of our troubled investments:
Mr. Gates went into the study of each of these business
concerns, and did the best he could with them.
It has been our policy never to allow a company in
which we had an interest to be thrown into the bankruptcy
court if we could prevent it; for receiverships are
very costly in many ways and often involve heavy sacrifices
of genuine values. Our plan has been to stay
with the institution, nurse it, lend it money when
necessary, improve facilities, cheapen production,
and avail ourselves of the opportunities which time
and patience are likely to bring to make it self-sustaining
and successful. So we went carefully through the
affairs of these crippled enterprises in the hard times
of 1893 and 1894, carrying many of them for years
after; sometimes buying the interests of others and
sometimes selling our own interest, but all or nearly
all escaped the expenses and humiliation of bankruptcy,
receivership, and foreclosure.

Before these matters were entirely closed up we had
a vast amount of experience in the doctoring of the
commercially ill. My only excuse for dwelling
upon the subject at this late day is to point out the
fact to some business men who get discouraged that
much can be done by careful and patient attention,
even when the business is apparently in very deep
water. It requires two things: some added
capital, put in by one’s self or secured from
others, and a strict adherence to the sound natural
laws of business.

THE ORE MINES

Among these investments were some shares in a number
of ore mines and an interest in the stocks and bonds
of a railroad being built to carry the ore from the
mines to lake ports. We had great faith in these
mines, but to work them the railroad was necessary.
It had been begun, but in the panic of 1893 it and
all other developments were nearly ruined. Although
we were minority holders of the stock, it seemed to
be “up to us” to keep the enterprise alive
through the harrowing panic days. I had to loan
my personal securities to raise money, and finally
we were compelled to supply a great deal of actual
cash, and to get it we were obliged to go into the

Page 45

then greatly upset money market and buy currency at
a high premium to ship west by express to pay the
labourers on the railroad and to keep them alive.
When the fright of the panic period subsided, and
matters became a little more settled, we began to
realize our situation. We had invested many millions,
and no one wanted to go in with us to buy stock.
On the contrary, everybody else seemed to want to
sell. The stock was offered to us in alarming
quantities—­substantially all of the capital
stock of the companies came without any solicitation
on our part—­quite the contrary—­and
we paid for it in cash.

We now found ourselves in control of a great amount
of ore lands, from some of which the ore could be
removed by a steam shovel for a few cents a ton, but
we still faced a most imperfect and inadequate method
of transporting the ore to market.

When we realized that events were shaping themselves
so that to protect our investments we should be obliged
to go into the business of selling in a large way,
we felt that we must not stop short of doing the work
as effectively as possible; and having already put
in so much money, we bought all the ore land that
we thought was good that was offered to us. The
railroad and the ships were only a means to an end.
The ore lands were the crux of the whole matter, and
we believed that we could never have too many good
mines.

It was a surprise to me that the great iron and steel
manufacturers did not place what seemed to be an adequate
value on these mines. The lands which contained
a good many of our best ore mines could have been
purchased very cheaply before we became interested.
Having launched ourselves into the venture, we decided
to supply ore to every one who needed it, by mining
and transporting with the newest and most effective
facilities, and our profits we invested in more ore
lands.

Mr. Gates became the president of the various companies
which owned the mines and the railroad to the lake
to transport the ores, and he started to learn and
develop the business of ore mining and transportation.
He not only proved to be an apt scholar, but he really
mastered the various complexities of the business.
He did all the work, and only consulted me when he
wished to; yet I remember several interesting experiences
connected with the working out of these problems.

BUILDING THE SHIPS

After this railroad problem was solved, it was apparent
that we needed our own ships to transport the ore
down the lakes. We knew absolutely nothing of
building ships for ore transportation, and so, following
out our custom, we went to the man who, in our judgment,
had the widest knowledge of the subject. He was
already well known to us, but was in the ore transportation
business on a large scale on his own account and,
of course, the moment we began to ship ore we realized
that we would become competitors. Mr. Gates got

Page 46

into communication with this expert, and came with
him one evening to my house in New York just before
dinner. He said he could stay only a few minutes,
but I told him that I thought we could finish up our
affairs in ten minutes and we did. This is the
only time I remember seeing personally any one on
the business of the ore company. All the conferences,
as I said before, were carried on by Mr. Gates, who
seemed to enjoy work, and he has had abundant privileges
in that direction.

We explained to this gentleman that we were proposing
to transport our ore from these Lake Superior lands
ourselves, and that we should like to have him assume
charge of the construction of several ships, to be
of the largest and most approved type, for our chance
of success lay in having boats which could be operated
with the greatest efficiency. At that time the
largest ships carried about five thousand tons, but
in 1900, when we sold out, we had ships that carried
seven thousand or eight thousand tons, and now there
are some that transport as much as ten thousand tons
and more.

This expert naturally replied that as he was in the
ore-carrying trade himself, he had no desire to encourage
us to go into it. We explained to him that as
we had made this large investment, it seemed to us
to be necessary for the protection of our interests
to control our own lake carriers, so we had decided
to mine, ship, and market the ore; that we came to
him because he could plan and superintend the construction
of the best ships for us, and that we wanted to deal
with him for that reason; that notwithstanding that
he represented one of the largest firms among our
competitors, we knew that he was honest and straightforward;
and that we were most anxious to deal with him.

EMPLOYING A COMPETITOR

He still demurred, but we tried to convince him that
we were not to be deterred from going into the trade,
and that we were willing to pay him a satisfactory
commission for looking after the building of the ships.
Somebody, we explained, was going to do the work for
us, and he might as well have the profit as the next
man. This argument finally seemed to impress
him and we then and there closed an agreement, the
details of which were worked out afterward to our mutual
satisfaction. This gentleman was Mr. Samuel Mather
of Cleveland. He spent only a few minutes in
the house, during which time we gave him the order
for about $3,000,000 worth of ships and this was the
only time I saw him. But Mr. Mather is a man
of high business honour, we trusted him implicitly
although he was a competitor, and we never had occasion
to regret it.

Page 47

At that time there were some nine or ten shipbuilding
companies located at various points on the Great Lakes.
All were independent of each other and there was sharp
competition between them. Times were pretty hard
with them; their business had not yet recovered from
the panic of 1893, they were not able to keep their
works in full operation; it was in the fall of the
year and many of their employees were facing a hard
winter. We took this into account in considering
how many ships we should build, and we made up our
minds that we would build all the ships that could
be built and give employment to the idle men on the
Great Lakes. Accordingly we instructed Mr. Mather
to write to each firm of shipbuilders and ascertain
how many ships they could build and put in readiness
for operation at the opening of navigation the next
spring. He found that some companies could build
one, some could build two, and that the total number
would be twelve. Accordingly we asked him to
have constructed twelve ships, all of steel, all of
the largest capacity then understood to be practicable
on the Great Lakes. Some of them were to be steamships
and some consorts, for towing, but all were to be
built on substantially the same general pattern, which
was to represent the best ideals then prevalent for
ore-carrying ships.

In giving such an order he was exposed, of course,
to the risk of paying very high prices. This
would have been certain if Mr. Mather had announced
in advance that he was prepared to build twelve ships
and asked bids on them. Just how he managed it
I was not told until long after, and though it is
now an old story of the lakes I repeat it as it may
be new to many. Mr. Mather kept the secret of
the number of ships he wished to construct absolutely
to himself. He sent his plans and specifications,
each substantially a duplicate of the others, to each
of the firms, and asked each firm to bid on one or
two ships as the case might be. All naturally
supposed that at most only two ships were to be built,
and each was extremely eager to get the work, or at
least one of the two vessels.

On the day before the contracts were to be let, all
the bidders were in Cleveland on the invitation of
Mr. Mather. One by one they were taken into his
private office for special conference covering all
the details preparatory to the final bid. At
the appointed hour the bids were in. Deep was
the interest on the part of all the gentlemen as to
who would be the lucky one to draw the prize.
Mr. Mather’s manner had convinced each that
somehow he himself must be the favoured bidder, yet
when he came to meet his competitors in the hotel lobby
the beams of satisfaction which plainly emanated from
their faces also compelled many heart searchings.

Page 48

At last the crucial hour came, and at about the same
moment each gentleman received a little note from
Mr. Mather, conveying to him the tidings that to him
had been awarded a contract sufficient to supply his
works to their utmost capacity. They all rushed
with a common impulse to the hotel lobby where they
had been accustomed to meet, each bent on displaying
his note and commiserating his unsuccessful rivals,
only to discover that each had a contract for all he
could do, and that each had been actually bidding
against nobody but himself. Great was the hilarity
which covered their chagrin when they met and compared
notes and looked into each others’ faces.
However, all were happy and satisfied. But it
may be said in passing that these amiable gentlemen
all united subsequently in one company, which has had
a highly satisfactory career, and that we paid a more
uniform price for our subsequent purchases of ships
after the combination had been made.

A LANDSMAN FOR SHIP MANAGER

With these ships ordered, we were fairly at the beginning
of the ore enterprise. But we realized that we
had to make some arrangement to operate the ships,
and we again turned to our competitor, Mr. Mather,
in the hope that he would add this to his cares.
Unfortunately, because of his obligations to others,
he felt that this was impractical. I asked Mr.
Gates one day soon after this:

“How are we to get some one to run these big
ships we have ordered? Do you know of any experienced
firm?”

“No,” said Mr. Gates, “I do not
know of any firm to suggest at the moment, but why
not run them ourselves?”

“You don’t know anything about ships,
do you?”

“No,” he admitted, “but I have in
mind a man who I believe could do it, although when
I tell you about him I fear you will think that his
qualifications are not the best. However, he has
the essentials. He lives up the state, and never
was on a ship in his life. He probably wouldn’t
know the bow from the stern, or a sea-anchor from an
umbrella, but he has good sense, he is honest, enterprising,
keen, and thrifty. He has the art of quickly
mastering a subject even though it be new to him and
difficult. We still have some months before the
ships will be completed, and if we put him to work
now, he will be ready to run the ships as soon as
they are ready to be run.”

“All right,” I said, “let’s
give him the job,” and we did.

That man was Mr. L.M. Bowers; he came from Broome
County, New York. Mr. Bowers went from point
to point on the lakes where the boats were building,
and studied them minutely. He was quickly able
to make valuable suggestions about their construction,
which were approved and adopted by the designers.
When the vessels were finished, he took charge of
them from the moment they floated, and he managed these
and the dozens which followed with a skill and ability
that commanded the admiration of all the sailors on

Page 49

the lakes. He even invented an anchor which he
used with our fleet, and later it was adopted by other
vessels, and I have heard that it is used in the United
States Navy. He remained in his position until
we sold out. We have given Mr. Bowers all sorts
of hard tasks since we retired from the lake traffic
and have found him always successful. Lately the
health of a member of his family has made it desirable
for him to live in Colorado, and he is now the vigorous
and efficient vice-president of the Colorado Fuel
and Iron Company.

The great ships and the railroad put us in possession
of the most favourable facilities. From the first
the organization was successful. We built up
a huge trade, mining and carrying ore to Cleveland
and other lake ports. We kept on building and
developing until finally the fleet grew until it included
fifty-six large steel vessels, This enterprise, in
common with many other important business undertakings
in which I was interested, required very little of
my personal attention, owing to my good fortune in
having active, competent, and thoroughly reliable
representatives who assumed so largely the responsibilities
of administration. It gives me pleasure to state
that the confidence which I have freely given to business
men with whom I have been associated has been so fully
justified.

SELLING TO THE STEEL COMPANY

The work went on uninterruptedly and prosperously
until the formation of the United States Steel Corporation.
A representative of this corporation came to see us
about selling the land, the ore, and the fleet of
ships. The business was going on smoothly, and
we had no pressing need to sell, but as the organizer
of the new company felt that our mines and railroads
and ships were a necessary part of the scheme, we
told him we would be pleased to facilitate the completion
of the great undertaking. They had, I think, already
closed with Mr. Carnegie for his various properties.
After some negotiation, they made an offer which we
accepted, whereby the whole plant—­mines,
ships, railway, etc.—­should become
a part of the United States Steel Corporation.
The price paid was, we felt, very moderate considering
the present and prospective value of the property.

This transaction bids fair to show a great profit
to the Steel Company for many years, and as our payment
was largely in the securities of the company we had
the opportunity to participate in this prosperity.
And so, after a period of about seven years, I went
out of all association with the mining, the transporting,
and the selling of iron ore.

FOLLOW THE LAWS OF TRADE

Going over again in my mind the events connected with
this ore experience that grew out of investments that
seemed at the time, to say the least, rather unpromising,
I am impressed anew with the importance of a principle
I have often referred to. If I can make this
point clear to the young man who has had the patience
to follow these Reminiscences so far, it will be a
satisfaction to me and I hope it may be a benefit
to him.

Page 50

The underlying, essential element of success in business
affairs is to follow the established laws of high-class
dealing. Keep to broad and sure lines, and study
them to be certain that they are correct ones.
Watch the natural operations of trade, and keep within
them. Don’t even think of temporary or
sharp advantages. Don’t waste your effort
on a thing which ends in a petty triumph unless you
are satisfied with a life of petty success. Be
sure that before you go into an enterprise you see
your way clear to stay through to a successful end.
Look ahead. It is surprising how many bright
business men go into important undertakings with little
or no study of the controlling conditions they risk
their all upon.

Study diligently your capital requirements, and fortify
yourself fully to cover possible set-backs, because
you can absolutely count on meeting set-backs.
Be sure that you are not deceiving yourself at any
time about actual conditions. The man who starts
out simply with the idea of getting rich won’t
succeed; you must have a larger ambition. There
is no mystery in business success. The great industrial
leaders have told again and again the plain and obvious
fact that there can be no permanent success without
fair dealing that leads to wide-spread confidence
in the man himself, and that is the real capital we
all prize and work for. If you do each day’s
task successfully, and stay faithfully within these
natural operations of commercial laws which I talk
so much about, and keep your head clear, you will come
out all right, and will then, perhaps, forgive me
for moralizing in this old-fashioned way. It
is hardly necessary to caution a young man who reads
so sober a book as this not to lose his head over a
little success, or to grow impatient or discouraged
by a little failure.

PANIC EXPERIENCES

I had desired to retire from business in the early
nineties. Having begun work so young, I felt
that at fifty it was due me to have freedom from absorption
in active business affairs and to devote myself to
a variety of interests other than money making, which
had claimed a portion of my time since the beginning
of my business career. But 1891-92 were years
of ominous outlook. In 1893 the storm broke,
and I had many investments to care for, as I have already
related. This year and the next was a trying period
of grave anxiety to everyone. No one could retire
from work at such a time. In the Standard we
continued to make progress even through all these panic
years, as we had large reserves of cash on account
of our very conservative methods of financing.
In 1894 or 1895 I was able to carry out my plans to
be relieved from any association with the actual management
of the company’s affairs. From that time,
as I have said, I have had little or no part in the
conduct of the business.

Page 51

Since 1857 I can remember all the great panics, but
I believe the panic of 1907 was the most trying.
No one escaped from it, great or small. Important
institutions had to be supported and carried through
the time of distrust and unreasoning fear. To
Mr. Morgan’s real and effective help I should
join with other business men and give great praise.
His commanding personality served a most valuable end.
He acted quickly and resolutely when quickness and
decision were the things most needed to regain confidence,
and he was efficiently seconded by many able and leading
financiers of the country who cooeperated courageously
and effectively to restore confidence and prosperity.
The question has been asked if I think we shall revive
quickly from the panic of October, 1907. I hesitate
to speak on the subject, since I am not a prophet
nor the son of a prophet; but as to the ultimate outcome
there is, of course, no doubt. This temporary
set-back will lead to safer institutions and more conservative
management upon the part of everyone, and this is a
quality we need. It will not long depress our
wonderful spirit of initiative. The country’s
resources have not been cut down nor injured by financial
distrust. A gradual recovery will only tend to
make the future all the more secure, and patience
is a virtue in business affairs as in other things.

Here again I would venture to utter a word of caution
to business men. Let them study their own affairs
frankly, and face the truth. If their methods
are extravagant, let them realize the facts and act
accordingly. One cannot successfully go against
natural tendencies, and it is folly to fail to recognize
them. It is not easy for so impressionable and
imaginative a people as we Americans are to come down
to plain, hard facts, yet we are doing it without loss
of self-esteem or prestige throughout the world.

CHAPTER VI

THE DIFFICULT ART OF GIVING

It is, no doubt, easy to write platitudes and generalities
about the joys of giving, and the duty that one owes
to one’s fellow men, and to put together again
all the familiar phrases that have served for generations
whenever the subject has been taken up.

I can hardly hope to succeed in starting any new interest
in this great subject when gifted writers have so
often failed. Yet I confess I find much more
interest in it at this time than in rambling on, as
I have been doing, about the affairs of business and
trade. It is most difficult, however, to dwell
upon a very practical and business-like side of benefactions
generally, without seeming to ignore, or at least
to fail to appreciate fully, the spirit of giving which
has its source in the heart, and which, of course,
makes it all worth while.

In this country we have come to the period when we
can well afford to ask the ablest men to devote more
of their time, thought, and money to the public well-being.
I am not so presumptuous as to attempt to define exactly
what this betterment work should consist of. Every
man will do that for himself, and his own conclusion
will be final for himself. It is well, I think,
that no narrow or preconceived plan should be set
down as the best.

Page 52

I am sure it is a mistake to assume that the possession
of money in great abundance necessarily brings happiness.
The very rich are just like all the rest of us; and
if they get pleasure from the possession of money,
it comes from their ability to do things which give
satisfaction to someone besides themselves.

LIMITATIONS OF THE RICH

The mere expenditure of money for things, so I am
told by those who profess to know, soon palls upon
one. The novelty of being able to purchase anything
one wants soon passes, because what people most seek
cannot be bought with money. These rich men we
read about in the newspapers cannot get personal returns
beyond a well-defined limit for their expenditure.
They cannot gratify the pleasures of the palate beyond
very moderate bounds, since they cannot purchase a
good digestion; they cannot lavish very much money
on fine raiment for themselves or their families without
suffering from public ridicule; and in their homes
they cannot go much beyond the comforts of the less
wealthy without involving them in more pain than pleasure.
As I study wealthy men, I can see but one way in which
they can secure a real equivalent for money spent,
and that is to cultivate a taste for giving where
the money may produce an effect which will be a lasting
gratification.

A man of business may often most properly consider
that he does his share in building up a property which
gives steady work for few or many people; and his
contribution consists in giving to his employees good
working conditions, new opportunities, and a strong
stimulus to good work. Just so long as he has
the welfare of his employees in his mind and follows
his convictions, no one can help honouring such a
man. It would be the narrowest sort of view to
take, and I think the meanest, to consider that good
works consist chiefly in the outright giving of money.

THE BEST PHILANTHROPY

The best philanthropy, the help that does the most
good and the least harm, the help that nourishes civilization
at its very root, that most widely disseminates health,
righteousness, and happiness, is not what is usually
called charity. It is, in my judgment, the investment
of effort or time or money, carefully considered with
relation to the power of employing people at a remunerative
wage, to expand and develop the resources at hand,
and to give opportunity for progress and healthful
labour where it did not exist before. No mere
money-giving is comparable to this in its lasting and
beneficial results.

If, as I am accustomed to think, this statement is
a correct one, how vast indeed is the philanthropic
field! It may be urged that the daily vocation
of life is one thing, and the work of philanthropy
quite another. I have no sympathy with this notion.
The man who plans to do all his giving on Sunday is
a poor prop for the institutions of the country.

Page 53

The excuse for referring so often to the busy man
of affairs is that his help is most needed. I
know of men who have followed out this large plan
of developing work, not as a temporary matter, but
as a permanent principle. These men have taken
up doubtful enterprises and carried them through to
success often at great risk, and in the face of great
scepticism, not as a matter only of personal profit,
but in the larger spirit of general uplift.

DISINTERESTED SERVICE THE ROAD TO SUCCESS

If I were to give advice to a young man starting out
in life, I should say to him: If you aim for
a large, broad-gauged success, do not begin your business
career, whether you sell your labour or are an independent
producer, with the idea of getting from the world by
hook or crook all you can. In the choice of your
profession or your business employment, let your first
thought be: Where can I fit in so that I may
be most effective in the work of the world? Where
can I lend a hand in a way most effectively to advance
the general interests? Enter life in such a spirit,
choose your vocation in that way, and you have taken
the first step on the highest road to a large success.
Investigation will show that the great fortunes which
have been made in this country, and the same is probably
true of other lands, have come to men who have performed
great and far-reaching economic services—­men
who, with great faith in the future of their country,
have done most for the development of its resources.
The man will be most successful who confers the greatest
service on the world. Commercial enterprises
that are needed by the public will pay. Commercial
enterprises that are not needed fail, and ought to
fail.

On the other hand, the one thing which such a business
philosopher would be most careful to avoid in his
investments of time and effort or money, is the unnecessary
duplication of existing industries. He would
regard all money spent in increasing needless competition
as wasted, and worse. The man who puts up a second
factory when the factory in existence will supply
the public demand adequately and cheaply is wasting
the national wealth and destroying the national prosperity,
taking the bread from the labourer and unnecessarily
introducing heartache and misery into the world.

Probably the greatest single obstacle to the progress
and happiness of the American people lies in the willingness
of so many men to invest their time and money in multiplying
competitive industries instead of opening up new fields,
and putting their money into lines of industry and
development that are needed. It requires a better
type of mind to seek out and to support or to create
the new than to follow the worn paths of accepted
success; but here is the great chance in our still
rapidly developing country. The penalty of a selfish
attempt to make the world confer a living without
contributing to the progress or happiness of mankind
is generally a failure to the individual. The
pity is that when he goes down he inflicts heartache
and misery also on others who are in no way responsible.

Page 54

THE GENEROSITY OF SERVICE

Probably the most generous people in the world are
the very poor, who assume each other’s burdens
in the crises which come so often to the hard pressed.
The mother in the tenement falls ill and the neighbour
in the next room assumes her burdens. The father
loses his work, and neighbours supply food to his
children from their own scanty store. How often
one hears of cases where the orphans are taken over
and brought up by the poor friend whose benefaction
means great additional hardship! This sort of
genuine service makes the most princely gift from
superabundance look insignificant indeed. The
Jews have had for centuries a precept that one-tenth
of a man’s possessions must be devoted to good
works, but even this measure of giving is but a rough
yardstick to go by. To give a tenth of one’s
income is wellnigh an impossibility to some, while
to others it means a miserable pittance. If the
spirit is there, the matter of proportion is soon lost
sight of. It is only the spirit of giving that
counts, and the very poor give without any self-consciousness.
But I fear that I am dealing with generalities again.

The education of children in my early days may have
been straightlaced, yet I have always been thankful
that the custom was quite general to teach young people
to give systematically of money that they themselves
had earned. It is a good thing to lead children
to realize early the importance of their obligations
to others but, I confess, it is increasingly difficult;
for what were luxuries then have become commonplaces
now. It should be a greater pleasure and satisfaction
to give money for a good cause than to earn it, and
I have always indulged the hope that during my life
I should be able to help establish efficiency in giving
so that wealth may be of greater use to the present
and future generations.

Perhaps just here lies the difference between the
gifts of money and of service. The poor meet
promptly the misfortunes which confront the home circle
and household of the neighbour. The giver of money,
if his contribution is to be valuable, must add service
in the way of study, and he must help to attack and
improve underlying conditions. Not being so pressed
by the racking necessities, it is he that should be
better able to attack the subject from a more scientific
standpoint; but the final analysis is the same:
his money is a feeble offering without the study behind
it which will make its expenditure effective.

Great hospitals conducted by noble and unselfish men
and women are doing wonderful work; but no less important
are the achievements in research that reveal hitherto
unknown facts about diseases and provide the remedies
by which many of them can be relieved or even stamped
out.

Page 55

To help the sick and distressed appeals to the kind-hearted
always, but to help the investigator who is striving
successfully to attack the causes which bring about
sickness and distress does not so strongly attract
the giver of money. The first appeals to the
sentiments overpoweringly, but the second has the head
to deal with. Yet I am sure we are making wonderful
advances in this field of scientific giving.
All over the world the need of dealing with the questions
of philanthropy with something beyond the impulses
of emotion is evident, and everywhere help is being
given to those heroic men and women who are devoting
themselves to the practical and essentially scientific
tasks. It is a good and inspiring thing to recall
occasionally the heroism, for example, of the men who
risked and sacrificed their lives to discover the
facts about yellow fever, a sacrifice for which untold
generations will bless them; and this same spirit
has animated the professions of medicine and surgery.

SCIENTIFIC RESEARCH

How far may this spirit of sacrifice properly extend?
A great number of scientific men every year give up
everything to arrive at some helpful contribution
to the sum of human knowledge, and I have sometimes
thought that good people who lightly and freely criticize
their actions scarcely realize just what such criticism
means. It is one thing to stand on the comfortable
ground of placid inaction and put forth words of cynical
wisdom, and another to plunge into the work itself
and through strenuous experience earn the right to
express strong conclusions.

For my own part, I have stood so much as a placid
onlooker that I have not had the hardihood even to
suggest how people so much more experienced and wise
in those things than I should work out the details
even of those plans with which I have had the honour
to be associated.

There has been a good deal of criticism, no doubt
sincere, of experiments on living dumb animals, and
the person who stands for the defenceless animal has
such an overwhelming appeal to the emotions that it
is perhaps useless to allude to the other side of the
controversy. Dr. Simon Flexner, of the Institute
for Medical Research, has had to face exaggerated
and even sensational reports, which have no basis
of truth whatever. But consider for a moment what
has been accomplished recently, under the direction
of Dr. Flexner in discovering a remedy for epidemic
cerebro-spinal meningitis. It is true that in
discovering this cure the lives of perhaps fifteen
animals were sacrificed, as I learn, most of them monkeys;
but for each one of these animals which lost its life,
already scores of human lives have been saved.
Large-hearted men like Dr. Flexner and his associates
do not permit unnecessary pain to defenceless animals.

I have been deeply interested in the story of a desperate
experiment to save a child’s life, told in a
letter written by one of my associates soon after
the event described; and it seems worthy of repeating.
Dr. Alexis Carrel has been associated with Dr. Flexner
and his work, and his wonderful skill has been the
result of his experiments and experiences.

Page 56

A wonderfulsurgicaloperation

“Dr. Alexis Carrel, one of the
Institute’s staff, has been making some
interesting studies in experimental surgery, and has
successfully transplanted organs from one animal
to another, and blood vessels from one species
to another. He had the opportunity recently
of applying the skill thus acquired to the saving of
a human life under circumstances which attracted
great interest among the medical fraternity of
this city. One of the best known of the younger
surgeons in New York had a child born early last March,
which developed a disease in which the blood,
for some reason, exudes from the blood vessels
into the tissues of the body, and ordinarily
the child dies of this internal hemorrhage. When
this child was five days old it was evident that
it was dying. The father and his brother,
who is one of the most distinguished men in the
profession, and one or two other doctors were in consultation
with reference to it, but considered the case
entirely hopeless.

“It so happened that the father
had been impressed with the work which Dr. Carrel
had been doing at the Institute, and had spent several
days with him studying his methods. He became
convinced that the only possibility of saving
the child’s life was by the direct transfusion
of blood. While this has been done between adults,
the blood vessels of a young infant are so delicate
that it seemed impossible that the operation
could be successfully carried on. It is
necessary not only that the blood vessels of the two
persons should be united together, but it must
be done in such a way that the interior lining
of the vessels, which is a smooth, shiny tissue,
should be continuous. If the blood comes in contact
with the muscular coat of the blood vessels, it
will clot and stop the circulation.

“Fortunately, Dr. Carrel had
been experimenting on the blood vessels of some
very young animals, and the father was convinced that
if any man in the country could perform the operation
successfully, it would be he.

“It was then the middle of the
night. But Dr. Carrel was called on, and
when the situation was explained to him, and it was
made clear that the child would die anyhow, he
readily consented to attempt the operation, although
expressing very slight hope of its successful
outcome.

“The father offered himself as
the person whose blood should be furnished to
the child. It was impossible to give anaesthetics
to either of them. In a child of that age
there is only one vein large enough to be used,
and that is in the back of the leg, and deep seated.
A prominent surgeon who was present exposed this vein.
He said afterward that there was no sign of life
in the child, and expressed the belief that the
child had been, to all intents and purposes,
dead for ten minutes. In view of its condition
he raised the question whether it was worth while

Page 57

to proceed further with the attempt. The
father, however, insisted upon going on, and the surgeon
then exposed the radial artery in the surgeon’s
wrist, and was obliged to dissect it back about
six inches, in order to pull it out far enough
to make the connection with the child’s vein.

“This part of the work the surgeon
who did it afterward described as the ‘blacksmith
part of the job.’ He said that the child’s
vein was about the size of a match and the consistency
of wet cigarette paper, and it seemed utterly
impossible for anyone to successfully unite these
two vessels. Dr. Carrel, however, accomplished
this feat. And then occurred what the doctors
who were present described as one of the most
dramatic incidents in the history of surgery.
The blood from the father’s artery was released,
and began to flow into the child’s body,
amounting to about a pint. The first sign of
life was a little pink tinge at the top of one
of the ears, then the lips, which had become
perfectly blue, began to change to red, and then
suddenly, as though the child had been taken from a
hot mustard bath, a pink glow broke out all over
its body, and it began to cry lustily. After
about eight minutes the two were separated. The
child at that time was crying for food. It was
fed, and from that moment began to eat and sleep
regularly, and made a complete recovery.

“The father appeared before a
legislative committee at Albany, in opposition
to certain bills which were pending at the last session
to restrict animal experimentation, and told this
incident, and said at the close that when he
saw Dr. Carrel’s experiments he had no
idea that they would so soon be available for saving
human life; much less did he imagine that the
life to be saved would be that of his own child.”

THE FUNDAMENTAL THING IN ALL HELP

If the people can be educated to help themselves,
we strike at the root of many of the evils of the
world. This is the fundamental thing, and it
is worth saying even if it has been said so often that
its truth is lost sight of in its constant repetition.

The only thing which is of lasting benefit to a man
is that which he does for himself. Money which
comes to him without effort on his part is seldom
a benefit and often a curse. That is the principal
objection to speculation—­it is not because
more lose than gain, though that is true—­but
it is because those who gain are apt to receive more
injury from their success than they would have received
from failure. And so with regard to money or
other things which are given by one person to another.
It is only in the exceptional case that the receiver
is really benefited. But, if we can help people
to help themselves, then there is a permanent blessing
conferred.

Page 58

Men who are studying the problem of disease tell us
that it is becoming more and more evident that the
forces which conquer sickness are within the body
itself, and that it is only when these are reduced
below the normal that disease can get a foothold.
The way to ward off disease, therefore, is to tone
up the body generally; and, when disease has secured
a foothold, the way to combat it is to help these
natural resisting agencies which are in the body already.
In the same way the failures which a man makes in
his life are due almost always to some defect in his
personality, some weakness of body, or mind, or character,
will, or temperament. The only way to overcome
these failings is to build up his personality from
within, so that he, by virtue of what is within him,
may overcome the weakness which was the cause of the
failure. It is only those efforts the man himself
puts forth that can really help him.

We all desire to see the widest possible distribution
of the blessings of life. Many crude plans have
been suggested, some of which utterly ignore the essential
facts of human nature, and if carried out would perhaps
drag our whole civilization down into hopeless misery.
It is my belief that the principal cause for the economic
differences between people is their difference in
personality, and that it is only as we can assist
in the wider distribution of those qualities which
go to make up a strong personality that we can assist
in the wider distribution of wealth. Under normal
conditions the man who is strong in body, in mind,
in character, and in will need never suffer want.
But these qualities can never be developed in a man
unless by his own efforts, and the most that any other
can do for him is, as I have said, to help him to
help himself.

We must always remember that there is not enough money
for the work of human uplift and that there never
can be. How vitally important it is, therefore,
that the expenditure should go as far as possible and
be used with the greatest intelligence!

I have been frank to say that I believe in the spirit
of combination and cooeperation when properly and
fairly conducted in the world of commercial affairs,
on the principle that it helps to reduce waste; and
waste is a dissipation of power. I sincerely hope
and thoroughly believe that this same principle will
eventually prevail in the art of giving as it does
in business. It is not merely the tendency of
the times developed by more exacting conditions in
industry, but it should make its most effective appeal
to the hearts of the people who are striving to do
the most good to the largest number.

SOME UNDERLYING PRINCIPLES

At the risk of making this chapter very dull, and
I am told that this is a fault which inexperienced
authors should avoid at all hazards, I may perhaps
be pardoned if I set down here some of the fundamental
principles which have been at the bottom of all my
own plans. I have undertaken no work of any importance
for many years which, in a general way, has not followed
out these broad lines, and I believe no really constructive
effort can be made in philanthropic work without such
a well-defined and consecutive purpose.

Page 59

My own conversion to the feeling that an organized
plan was an absolute necessity came about in this
way.

About the year 1890 I was still following the haphazard
fashion of giving here and there as appeals presented
themselves. I investigated as I could, and worked
myself almost to a nervous break-down in groping my
way, without sufficient guide or chart, through this
ever-widening field of philanthropic endeavour.
There was then forced upon me the necessity to organize
and plan this department of our daily tasks on as
distinct lines of progress as we did our business
affairs; and I will try to describe the underlying
principles we arrived at, and have since followed
out, and hope still greatly to extend.

It may be beyond the pale of good taste to speak at
all of such a personal subject—­I am not
unmindful of this—­but I can make these
observations with at least a little better grace because
so much of the hard work and hard thinking are done
by my family and associates, who devote their lives
to it.

Every right-minded man has a philosophy of life, whether
he knows it or not. Hidden away in his mind are
certain governing principles, whether he formulates
them in words or not, which govern his life.
Surely his ideal ought to be to contribute all that
he can, however little it may be, whether of money
or service, to human progress.

Certainly one’s ideal should be to use one’s
means, both in one’s investments and in benefactions,
for the advancement of civilization. But the
question as to what civilization is and what are the
great laws which govern its advance have been seriously
studied. Our investments not less than gifts
have been directed to such ends as we have thought
would tend to produce these results. If you were
to go into our office, and ask our committee on benevolence
or our committee on investment in what they consider
civilization to consist, they would say that they
have found in their study that the most convenient
analysis of the elements which go to make up civilization
runs about as follows:

1st. Progress in the means of subsistence, that
is to say, progress in abundance and variety of food-supply,
clothing, shelter, sanitation, public health, commerce,
manufacture, the growth of the public wealth, etc.

2nd. Progress in government and law, that is
to say, in the enactment of laws securing justice
and equity to every man, consistent with the largest
individual liberty, and the due and orderly enforcement
of the same upon all.

3rd. Progress in literature and language.

4th. Progress in science and philosophy.

5th. Progress in art and refinement.

6th. Progress in morality and religion.

If you were to ask them, as indeed they are very often
asked, which of these they regard as fundamental,
they would reply that they would not attempt to answer,
that the question is purely an academic one, that
all these go hand in hand, but that historically the
first of them—­namely, progress in means
of subsistence—­had generally preceded progress
in government, in literature, in knowledge, in refinement,
and in religion. Though not itself of the highest
importance, it is the foundation upon which the whole
superstructure of civilization is built, and without
which it could not exist.

Page 60

Accordingly, we have sought, so far as we could, to
make investments in such a way as will tend to multiply,
to cheapen, and to diffuse as universally as possible
the comforts of life. We claim no credit for
preferring these lines of investment. We make
no sacrifices. These are the lines of largest
and surest return. In this particular, namely,
in cheapness, ease of acquirement, and universality
of means of subsistence, our country easily surpasses
that of any other in the world, though we are behind
other countries, perhaps, in most of the others.

It may be asked: How is it consistent with the
universal diffusion of these blessings that vast sums
of money should be in single hands? The reply
is, as I see it, that, while men of wealth control
great sums of money, they do not and cannot use them
for themselves. They have, indeed, the legal
title to large properties, and they do control the
investment of them, but that is as far as their own
relation to them extends or can extend. The money
is universally diffused, in the sense that it is kept
invested, and it passes into the pay-envelope week
by week.

Up to the present time no scheme has yet presented
itself which seems to afford a better method of handling
capital than that of individual ownership. We
might put our money into the Treasury of the Nation
and of the various states, but we do not find any
promise in the National or state legislatures, viewed
from the experiences of the past, that the funds would
be expended for the general weal more effectively than
under the present methods, nor do we find in any of
the schemes of socialism a promise that wealth would
be more wisely administered for the general good.
It is the duty of men of means to maintain the title
to their property and to administer their funds until
some man, or body of men, shall rise up capable of
administering for the general good the capital of
the country better than they can.

The next four elements of progress mentioned in the
enumeration above, namely, progress in government
and law, in language and literature, in science and
philosophy, in art and refinement, we for ourselves
have thought to be best promoted by means of the higher
education, and accordingly we have had the great satisfaction
of putting such sums as we could into various forms
of education in our own and in foreign lands—­and
education not merely along the lines of disseminating
more generally the known, but quite as much, and perhaps
even more, in promoting original investigation.
An individual institution of learning can have only
a narrow sphere. It can reach only a limited
number of people. But every new fact discovered,
every widening of the boundaries of human knowledge
by research, becomes universally known to all institutions
of learning, and becomes a benefaction at once to
the whole race.

Page 61

Quite as interesting as any phase of the work have
been the new lines entered upon by our committee.
We have not been satisfied with giving to causes which
have appealed to us. We have felt that the mere
fact that this or the other cause makes its appeal
is no reason why we should give to it any more than
to a thousand other causes, perhaps more worthy, which
do not happen to have come under our eye. The
mere fact of a personal appeal creates no claim which
did not exist before, and no preference over other
causes more worthy which may not have made their appeal.
So this little committee of ours has not been content
to let the benevolences drift into the channels of
mere convenience—­to give to the institutions
which have sought aid and to neglect others.
This department has studied the field of human progress,
and sought to contribute to each of those elements
which we believe tend most to promote it. Where
it has not found organizations ready to its hand for
such purpose, the members of the committee have sought
to create them. We are still working on new, and,
I hope, expanding lines, which make large demands
on one’s intelligence and study.

The so-called betterment work which has always been
to me a source of great interest had a great influence
on my life, and I refer to it here because I wish
to urge in this connection the great importance of
a father’s keeping in close touch with his children,
taking into his confidence the girls as well as the
boys, who in this way learn by seeing and doing, and
have their part in the family responsibilities.
As my father taught me, so I have tried to teach my
children. For years it was our custom to read
at the table the letters we received affecting the
various benevolences with which we had to do, studying
the requests made for worthy purposes, and following
the history and reports of institutions and philanthropic
cases in which we were interested.

CHAPTER VII

Thebenevolenttrust—­thevalueofthe COOePERATIVE principleingiving

Going a step farther in the plan of making benefactions
increasingly effective which I took up in the last
chapter under the title of “The Difficult Art
of Giving,” I am tempted to take the opportunity
to dwell a little upon the subject of combination
in charitable work, which has been something of a
hobby with me for many years.

If a combination to do business is effective in saving
waste and in getting better results, why is not combination
far more important in philanthropic work? The
general idea of cooeperation in giving for education,
I have felt, scored a real step in advance when Mr.
Andrew Carnegie consented to become a member of the
General Education Board. For in accepting a position
in this directorate he has, it seems to me, stamped
with his approval this vital principle of cooeperation
in aiding the educational institutions of our country.

Page 62

I rejoice, as everybody must, in Mr. Carnegie’s
enthusiasm for using his wealth for the benefit of
his less fortunate fellows and I think his devotion
to his adopted land’s welfare has set a striking
example for all time.

The General Education Board, of which Mr. Carnegie
has now become a member, is interesting as an example
of an organization formed for the purpose of working
out, in an orderly and rather scientific way, the
problem of helping to stimulate and improve education
in all parts of our country. What this organization
may eventually accomplish, of course, no one can tell,
but surely, under its present board of directors,
it will go very far. Here, again, I feel that
I may speak frankly and express my personal faith
in its success, since I am not a member of the board,
and have never attended a meeting, and the work is
all done by others.

There are some other and larger plans thought out
on careful and broad lines, which I have been studying
for many years, and we can see that they are growing
into definite shape. It is good to know that there
are always unselfish men, of the best calibre, to help
in every large philanthropic enterprise. One
of the most satisfactory and stimulating pieces of
good fortune that has come to me is the evidence that
so many busy people are willing to turn aside from
their work in pressing fields of labour and to give
their best thoughts and energies without compensation
to the work of human uplift. Doctors, clergymen,
lawyers, as well as many high-grade men of affairs,
are devoting their best and most unselfish efforts
to some of the plans that we are all trying to work
out.

Take, as one example of many similar cases, Mr. Robert
C. Ogden, who for years, while devoting himself to
an exacting business, still found time, supported
by wonderful enthusiasm, to give force by his own
personality to work done in difficult parts of the
educational world, particularly to improving the common
school system of the South. His efforts have
been wisely directed along fundamental lines which
must produce results through the years to come.

Fortunately my children have been as earnest as I,
and much more diligent, in carefully and intelligently
carrying out the work already begun, and agree with
me that at least the same energy and thought should
be expended in the proper and effective use of money
when acquired as was exerted in the earning of it.

The General Education Board has made, or is making,
a careful study of the location, aims, work, resources,
administration, and educational value, present and
prospective, of the institutions of higher learning
in the United States. The board makes its contributions,
averaging something like two million dollars a year,
on the most careful comparative study of needs and
opportunities throughout the country. Its records
are open to all. Many benefactors of education
are availing themselves of these disinterested inquiries,
and it is hoped that more will do so.

Page 63

A large number of individuals are contributing to
the support of educational institutions in our country.
To help an inefficient, ill-located, unnecessary school
is a waste. I am told by those who have given
most careful study to this problem that it is highly
probable that enough money has been squandered on unwise
educational projects to have built up a national system
of higher education adequate to our needs if the money
had been properly directed to that end. Many
of the good people who bestow their beneficence on
education may well give more thought to investigating
the character of the enterprises that they are importuned
to help, and this study ought to take into account
the kind of people who are responsible for their management,
their location, and the facilities supplied by other
institutions round about. A thorough examination
such as this is generally quite impossible for an
individual, and he either declines to give from lack
of accurate knowledge, or he may give without due
consideration. If, however, this work of inquiry
is done, and well done, by the General Education Board,
through officers of intelligence, skill, and sympathy,
trained to the work, important and needed service
is rendered. The walls of sectarian exclusiveness
are fast disappearing, as they should, and the best
people are standing shoulder to shoulder as they attack
the great problems of general uplift.

ROMAN CATHOLIC CHARITIES

Just here it occurs to me to testify to the fact that
the Roman Catholic Church, as I have observed in my
experience, has advanced a long way in this direction.
I have been surprised to learn how far a given sum
of money has gone in the hands of priests and nuns,
and how really effective is their use of it.
I fully appreciate the splendid service done by other
workers in the field, but I have seen the organization
of the Roman Church secure better results with a given
sum of money than other Church organizations are accustomed
to secure from the same expenditure. I speak
of this merely to point the value of the principle
of organization, in which I believe so heartily.
It is unnecessary to dwell upon the centuries of experience
which the Church of Rome has gone through to perfect
a great power of organization.

Studying these problems has been a source of the greatest
interest to me. My assistants, quite distinct
from any board, have an organization of sufficient
size to investigate the many requests that come to
us. This is done from the office of our committee
in New York. For an individual to attempt to
keep any close watch of single cases would be impossible.
I am called upon to explain this fact many times.
To read the hundreds of letters daily received at
our office would be beyond the power of any one man,
and surely, if the many good people who write would
only reflect a little, they must realize that it is
impossible for me personally to consider their applications.

Page 64

The plan that we have worked out, and I hope improved
upon year after year, has been the result of experience,
and I refer to it now only as one contribution to
a general subject which is of such great moment to
earnest people; and this must be my excuse for speaking
so frankly.

THE APPEALS THAT COME

The reading, assorting, and investigating of the hundreds
of letters of appeal which are received daily at my
office are attended to by a department organized for
this purpose. The task is not so difficult as
at first it might seem. The letters are, to be
sure, of great variety, from all sorts of people in
every condition of life, and indeed, from all parts
of the world. Four-fifths of these letters are,
however, requests for money for personal use, with
no other title to consideration than that the writer
would be gratified to have it.

There remain numbers of requests which all must recognize
as worthy of notice. These may be divided, roughly,
as follows:

The claims of local charities. The town or city
in which one lives has a definite appeal to all its
citizens, and all good neighbours will wish to cooeperate
with friends and fellow townsmen. But these local
charities, hospitals, kindergartens, and the like,
ought not to make appeal outside the local communities
which they serve. The burden should be carried
by the people who are on the spot and who are, or
should be, most familiar with local needs.

Then come the national and international claims.
These properly appeal especially to men of large means
throughout the country, whose wealth admits of their
doing something more than assist in caring for the
local charities. There are many great national
and international philanthropic and Christian organizations
that cover the whole field of world-wide charity;
and, while people of reputed wealth all receive appeals
from individual workers throughout the world for personal
assistance, the prudent and thoughtful giver will,
more and more, choose these great and responsible
organizations as the medium for his gifts and the
distribution of his funds to distant fields. This
has been my custom, and the experience of every day
serves only to confirm its wisdom.

The great value of dealing with an organization which
knows all the facts, and can best decide just where
the help can be applied to the best advantage, has
impressed itself upon me through the results of long
years of experience. For example, one is asked
to give in a certain field of missionary work a sum,
for a definite purpose—­let us say a hospital.
To comply with this request will take, say, $10,000.
It seems wise and natural to give this amount.
The missionary who wants this money is working under
the direction of a strong and capable religious denomination.

Page 65

Suppose the request is referred to the manager of
the board of this denomination, and it transpires
that there are many good reasons why a new hospital
is not badly needed at this point, and by a little
good management the need of this missionary can be
met by another hospital in its neighbourhood; whereas
another missionary in another place has no such possibility
for any hospital facilities whatever. There is
no question that the money should be spent in the
place last named. These conditions the managers
of all the mission stations know, although perhaps
the one who is giving the money never heard of them,
and in my judgment he is wise in not acting until
he has consulted these men of larger information.

It is interesting to follow the mental processes that
some excellent souls go through to cloud their consciences
when they consider what their duty actually is.
For instance, one man says: “I do not believe
in giving money to street beggars.” I agree
with him, I do not believe in the practice either;
but that is not a reason why one should be exempt
from doing something to help the situation represented
by the street beggar. Because one does not yield
to the importunities of such people is exactly the
reason one should join and uphold the charity organization
societies of one’s own locality, which deal
justly and humanely with this class, separating the
worthy from the unworthy.

Another says: “I don’t give to such
and such a board, because I have read that of the
money given only half or less actually gets to the
person needing help.” This is often not
a true statement of fact, as proved again and again,
and even if it were true in part it does not relieve
the possible giver from the duty of helping to make
the organization more efficient. By no possible
chance is it a valid excuse for closing up one’s
pocketbook and dismissing the whole subject from one’s
mind.

INSTITUTIONS AS THEY RELATE TO EACH OTHER

Surely it is wise to be careful not to duplicate effort
and not to inaugurate new charities in fields already
covered, but rather to strengthen and perfect those
already at work. There is a great deal of rivalry
and a vast amount of duplication, and one of the most
difficult things in giving is to ascertain when the
field is fully covered. Many people simply consider
whether the institution to which they are giving is
thoughtfully and well managed, without stopping to
discover whether the field is not already occupied
by others; and for this reason one ought not to investigate
a single institution by itself, but always in its
relation to all similar institutions in the territory.
Here is a case in point:

A number of enthusiastic people had a plan for founding
an orphan asylum which was to be conducted by one
of our strongest religious denominations. The
raising of the necessary funds was begun, and among
the people who were asked to subscribe was a man who
always made it a practice to study the situation carefully
before committing himself to a contribution.
He asked one of the promoters of the new institution
how many beds the present asylums serving this community
provided, how efficient they were, where located,
and what particular class of institution was lacking
in the community.

Page 66

To none of these questions were answers forthcoming,
so he had this information gathered on his own account
with the purpose of helping to make the new plan effective.
His studies revealed the fact that the city where
the new asylum was to be built was so well provided
with such institutions that there were already vastly
more beds for children than there were applicants
to fill them, and that the field was well and fully
covered. These facts being presented to the organizers
of the enterprise, it was shown that no real need for
such an institution existed. I wish I might add
that the scheme was abandoned. It was not.
Such charities seldom are when once the sympathies
of the worthy people, however misinformed, are heartily
enlisted.

It may be urged that doing the work in this systematic
and apparently cold-blooded way leaves out of consideration,
to a large extent, the merits of individual cases.
My contention is that the organization of work in
combination should not and does not stifle the work
of individuals, but strengthens and stimulates it.
The orderly combination of philanthropic effort is
growing daily, and at the same time the spirit of
broad philanthropy never was so general as it is now.

THE CLAIM OF HIGHER EDUCATION

The giver who works out these problems for himself
will, no doubt, find many critics. So many people
see the pressing needs of every-day life that possibly
they fail to realize those which are, if less obvious,
of an even larger significance—­for instance,
the great claims of higher education. Ignorance
is the source of a large part of the poverty and a
vast amount of the crime in the world—­hence
the need of education. If we assist the highest
forms of education—­in whatever field—­we
secure the widest influence in enlarging the boundaries
of human knowledge; for all the new facts discovered
or set in motion become the universal heritage.
I think we cannot overestimate the importance of this
matter. The mere fact that most of the great
achievements in science, medicine, art, and literature
are the flower of the higher education is sufficient.
Some great writer will one day show how these things
have ministered to the wants of all the people, educated
and uneducated, high and low, rich and poor, and made
life more what we all wish it to be.

The best philanthropy is constantly in search of the
finalities—­a search for cause, an attempt
to cure evils at their source. My interest in
the University of Chicago has been enhanced by the
fact that while it has comprehensively considered
the other features of a collegiate course, it has
given so much attention to research.

DR. WILLIAM R. HARPER

The mention of this promising young institution always
brings to my mind the figure of Dr. William R. Harper,
whose enthusiasm for its work was so great that no
vision of its future seemed too large.

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My first meeting with Dr. Harper was at Vassar College,
where one of my daughters was a student. He used
to come, as the guest of Dr. James M. Taylor, the
president, to lecture on Sundays; and as I frequently
spent week-ends there, I saw and talked much with the
young professor, then of Yale, and caught in some
degree the contagion of his enthusiasm.

When the university had been founded, and he had taken
the presidency, our great ambition was to secure the
best instructors and to organize the new institution,
unhampered by traditions, according to the most modern
ideals. He raised millions of dollars among the
people of Chicago and the Middle West, and won the
personal interest of their leading citizens.
Here lay his great strength, for he secured not only
their money but their loyal support and strong personal
interest—­the best kind of help and cooeperation.
He built even better than he knew. His lofty
ideals embodied in the university awakened a deeper
interest in higher education throughout the Central
West, and stirred individuals, denominations, and
legislatures to effective action. The world will
probably never realize how largely the present splendid
university system of the Central Western States is
due indirectly to the genius of this man.

With all his extraordinary power of work and his executive
and organizing ability, Dr. Harper was a man of exquisite
personal charm. We count it among the rich and
delightful experiences of our home-life that Dr. and
Mrs. Harper could occasionally spend days together
with us for a brief respite from the exacting cares
and responsibilities of the university work.
As a friend and companion, in daily intercourse, no
one could be more delightful than he.

It has been my good fortune to contribute at various
times to the University of Chicago, of which Dr. Harper
was president, and the newspapers not unnaturally
supposed at such times that he used the occasions
of our personal association to secure these contributions.
The cartoonists used to find this a fruitful theme.
They would picture Dr. Harper as a hypnotist waving
his magic spell, or would represent him forcing his
way into my inner office where I was pictured as busy
cutting coupons and from which delightful employment
I incontinently fled out of the window at sight of
him; or they would represent me as fleeing across
rivers on cakes of floating ice with Dr. Harper in
hot pursuit; or perhaps he would be following close
on my trail, like the wolf in the Russian story, in
inaccessible country retreats, while I escaped only
by means of the slight delays I occasioned him by now
and then dropping a million-dollar bill, which he
would be obliged to stop and pick up.

These cartoons were intended to be very amusing, and
some of them certainly did have a flavour of humour,
but they were never humorous to Dr. Harper. They
were in fact a source of deep humiliation to him,
and I am sure he would, were he living, be glad to
have me say, as I now do, that during the entire period
of his presidency of the University of Chicago, he
never once either wrote me a letter or asked me personally
for a dollar of money for the University of Chicago.
In the most intimate daily intercourse with him in
my home, the finances of the University of Chicago
were never canvassed or discussed.

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The method of procedure in this case has been substantially
the same as with all other contributions. The
presentation of the needs of the university has been
made in writing by the officers of the university,
whose special duty it is to prepare its budgets and
superintend its finances. A committee of the
trustees, with the president, have annually conferred,
at a fixed time, with our Department of Benevolence,
as to its needs. Their conclusions have generally
been entirely unanimous and I have found no occasion
hitherto seriously to depart from their recommendations.
There have been no personal interviews and no personal
solicitations. It has been a pleasure to me to
make these contributions, but that pleasure has arisen
out of the fact that the university is located in
a great centre of empire; that it has rooted itself
in the affections and interest of the people among
whom it is located; that it is doing a great and needed
work—­in fine, that it has been able to
attract and to justify the contributions of its patrons
East and West. It is not personal interviews
and impassioned appeals, but sound and justifying worth,
that should attract and secure the funds of philanthropy.

The people in great numbers who are constantly importuning
me for personal interviews in behalf of favourite
causes err in supposing that the interview, were it
possible, is the best way, or even a good way, of
securing what they want. Our practice has been
uniformly to request applicants to state their cases
tersely, but nevertheless as fully as they think necessary,
in writing. Their application is carefully considered
by very competent people chosen for this purpose.
If, thereupon, personal interviews are found desirable
by our assistants, they are invited from our office.

Written presentations form the necessary basis of
investigation, of consultation, and comparison of
views between the different members of our staff,
and of the final presentation to me.

It is impossible to conduct this department of our
work in any other way. The rule requiring written
presentation as against the interview is enforced
and adhered to not, as the applicant sometimes supposes,
as a cold rebuff to him, but in order to secure for
his cause, if it be a good one, the careful consideration
which is its due—­a consideration that cannot
be given in a mere verbal interview.

THE REASON FOR CONDITIONAL GIFTS

It is easy to do harm in giving money. To give
to institutions which should be supported by others
is not the best philanthropy. Such giving only
serves to dry up the natural springs of charity.

It is highly important that every charitable institution
shall have at all times the largest possible number
of current contributors. This means that the
institution shall constantly be making its appeals;
but, if these constant appeals are to be successful,
the institution is forced to do excellent work and
meet real and manifest needs. Moreover, the interest
of many people affords the best assurance of wise
economy and unselfish management as well as of continued
support.

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We frequently make our gifts conditional on the giving
of others, not because we wish to force people to
do their duty, but because we wish in this way to
root the institution in the affections of as many
people as possible who, as contributors, become personally
concerned, and thereafter may be counted on to give
to the institution their watchful interest and cooeperation.
Conditional gifts are often criticized, and sometimes,
it may be, by people who have not thought the matter
out fully.

Criticism which is deliberate, sober, and fair is
always valuable and it should be welcomed by all who
desire progress. I have had at least my full
share of adverse criticism, but I can truly say that
it has not embittered me, nor left me with any harsh
feeling against a living soul. Nor do I wish
to be critical of those whose conscientious judgment,
frankly expressed, differs from my own. No matter
how noisy the pessimists may be, we know that the
world is getting better steadily and rapidly, and
that is a good thing to remember in our moments of
depression or humiliation.

THE BENEVOLENT TRUSTS

To return to the subject of the Benevolent Trusts,
which is a name for corporations to manage the business
side of benefactions. The idea needs, and to
be successful must have, the help of men who have been
trained along practical lines. The best men of
business should be attracted by its possibilities
for good. When it is eventually worked out, as
it will be in some form, and probably in a better one
than we can now forecast, how worthy it will be of
the efforts of our ablest men!

We shall have the best charities supported generously
and adequately, managed with scientific efficiency
by the ablest men, who will gladly he held strictly
accountable to the donors of the money, not only for
the correct financing of the funds, but for the intelligent
and effective use of every penny. To-day the
whole machinery of benevolence is conducted upon more
or less haphazard principles. Good men and women
are wearing out their lives to raise money to sustain
institutions which are conducted by more less or unskilled
methods. This is a tremendous waste of our best
material.

We cannot afford to have great souls who are capable
of doing the most effective work slaving to raise
the money. That should be a business man’s
task, and he should be supreme in managing the machinery
of the expenses. The teachers, the workers, and
the inspired leaders of the people should be relieved
of these pressing and belittling money cares.
They have more than enough to do in tilling their tremendous
and never fully occupied field, and they should be
free from any care which might in any wise divert
them from that work.

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When these Benevolent Trusts come into active being,
such organizations on broad lines will be sure to
attract the brains of the best men we have in our
commercial affairs, as great business opportunities
attract them now. Our successful business men
as a class, and the exceptions only prove the truth
of the assertion, have a high standard of honour.
I have sometimes been tempted to say that our clergymen
could gain by knowing the essentials of business life
better. The closer association with men of affairs
would, I think, benefit both classes. People
who have had much to do with ministers and those who
hold confidential positions in our churches have at
times had surprising experiences in meeting what is
sometimes practised in the way of ecclesiastical business,
because these good men have had so little of business
training in the work-a-day world.

The whole system of proper relations, whether it be
in commerce, or in the Church, or in the sciences,
rests on honour. Able business men seek to confine
their dealings to people who tell the truth and keep
their promises; and the representatives of the Church,
who are often prone to attack business men as a type
of what is selfish and mean, have some great lessons
to learn, and they will gladly learn them as these
two types of workers grow closer together.

The Benevolent Trusts, when they come, will raise
these standards; they will look the facts in the face;
they will applaud and sustain the effective workers
and institutions; and they will uplift the intelligent
standard of good work in helping all the people chiefly
to help themselves. There are already signs that
these combinations are coming, and coming quickly,
and in the directorates of these trusts you will eventually
find the flower of our American manhood, the men who
not only know how to make money, but who accept the
great responsibility of administering it wisely.

A few years ago, on the occasion of the decennial
anniversary of the University of Chicago, I was attending
a university dinner, and having been asked to speak
I had jotted down a few notes.

When the time arrived to stand up and face these guests—­men
of worth and position—­my notes meant nothing
to me. As I thought of the latent power of good
that rested with these rich and influential people
I was greatly affected. I threw down my notes
and started to plead for my Benevolent Trust plan.

“You men,” I said, “are always looking
forward to do something for good causes. I know
how very busy you are. You work in a treadmill
from which you see no escape. I can easily understand
that you feel that it is beyond your present power
carefully to study the needs of humanity, and that
you wait to give until you have considered many things
and decided upon some course of action. Now, why
not do with what you can give to others as you do
with what you want to keep for yourself and your children:
Put it into a Trust? You would not place a fortune

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for your children in the hands of an inexperienced
person, no matter how good he might be. Let us
be as careful with the money we would spend for the
benefit of others as if we were laying it aside for
our own family’s future use. Directors carry
on these affairs in your behalf. Let us erect
a foundation, a Trust, and engage directors who will
make it a life work to manage, with our personal cooeperation,
this business of benevolence properly and effectively.
And I beg of you, attend to it now, don’t
wait.”